Federal Reserve Surveys Show Impact of Obamacare on Businesses
September 2, 2014
The New York Federal Reserve has issued the results of its Manufacturing Survey and Business Leaders Survey, and the results are not good for Obamacare. How exactly are businesses responding to the Affordable Care Act? According to the report:
- Both manufacturing and service firms reported that their health care costs had gone up in 2014, with manufacturers reporting a median 10 percent increase and service firms a 9 percent increase. Both expect a 10 percent increase in costs for 2015.
- Thirty-five percent of manufacturers and 20 percent of service firms reported that the ACA increased their costs "a lot" in 2014. Fifty percent of manufacturers expect to see considerable cost increases in 2015, as do one-third of service firms.
- A majority of firms reported that their premiums had risen, with many businesses reporting that they were passing those costs along to their employees by requiring higher contributions.
- One-fifth of manufacturing and service firms reported reducing the number of workers on staff or raising the number of part-time employees. Another 20 percent said that they were reducing compensation to pay for the ACA, while 20 percent of manufacturing firms said that they were engaging in more outsourcing.
- Thirty-six percent of manufacturers reported raising consumer prices, as did one-quarter of service firms.
The Philadelphia Federal Reserve found similar effects in its Business Outlook Survey for August. According to its survey of manufacturers:
- Eighteen percent of firms have increased the number of workers who are part-time due to the ACA.
- Thirteen percent of firms have increased the amount of work that they outsource to other firms in response to the ACA.
- Close to 29 percent of firms have increased the prices that they charge to consumers due to the ACA.
- Of the 51 percent of firms that have made changes to their health insurance policies, 88 percent increased their employees' premium contributions, 91 percent increased deductibles and 76 percent increased out-of-pocket maximums. Additionally, 26 percent reported reducing the size of their networks.
As NCPA Senior Fellow John Graham said of the report, "This is real evidence that Obamacare is harming our prosperity."
Source: "Supplemental Survey Report: Firms Assess Effects of Affordable Care Act," Federal Reserve Bank of New York, August 2014; "August 2014 Business Outlook Survey," Federal Reserve Bank of Philadelphia, August 2014.
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