The wage gap between government employees and the private sector is already large and growing. Now there will be a gap in benefits due to the Patient Protection and Affordable Care Act (AKA Obamacare) also.
Employees working for Fortune 500 companies can expect to pay higher employee contributions for their health insurance, according to a survey of chief human resource officer.
Patrick Wright, a professor in strategic human resource management at the University of South Carolina, directs the annual the HR@Moore Survey of Chief HR Officers. The survey is distributed to more than 560 CHROs of Fortune 500 companies and members of HR Policy Association, a professional organization.
More than 200 responded to this year's survey, providing a definitive look at how medium and large-sized firms have been affected by the changes to the health insurance and health care system and how companies have responded.
"The Affordable Care Act is a huge public policy issue. Up to now there has been only speculation as to its impact on business and workers," Wright says. "This survey provides the facts about that impact and specifics on changes to employment practices as a result."
The survey yielded nearly a 38 percent respond rate, far higher than typical industry survey response rates of 10 – 15 percent. Wright says that's not only a result of CHR officers' continued trust for the survey but says it reflects the importance of the topic.
"Chief human resource officers view this survey as a valuable benchmarking tool. It lets them see options and the popularity of employment strategies being taken by firms as they weigh and decide their course of action," he says.
Key findings from the survey include:
- 78 percent report a rise in health insurance costs (average of 7.73 percent);
- 37 percent report a rise in labor costs (average of 5.6 percent);
- 73 percent report having moved or will move employees to Consumer Directed Health Plans;
- 71 percent report raising or plans to raise employee contributions to health insurance;
- 30 percent report moving or plans to move pre-65 retirees to ACA health exchanges;
- 27 percent report cutting back health insurance coverage eligibility;
- 24 percent report ensuring that part-time employees work less than 30 hours weekly to avoid penalty;
- 12 percent report increasing or plan to increase part-time workers; and
- 10 percent report limiting or plan to limit the full-time employee hires.
Wright says he was surprised by the results.
"Based on conversations I've had with CHROs, I thought the findings would be worse than they were. However, I think we can expect to see negative impacts increase as mandated requirements from PPACA become universal throughout the healthcare system," he says.
Even so, 87 percent of chief HR officers reported taking or planning to take last least one action to reduce costs. And, most of those actions are being shouldered by employees.
The most common strategy is moving employees into Consumer Directed Health Plans. CDHPs provide employees with a set amount of money for regular (not catastrophic) healthcare that they manage, which shifts responsibility from employer to worker. Firms also are defraying the rising cost of health insurance to employees by raising the premiums they pay for their health insurance and limiting dependent coverage.
"Companies also are managing their part-time workforce more carefully," Wright says.
PPACA requires employers to provide health insurance to employees who work 30 hours or more weekly. While small businesses are more likely to hire part-time workers, Wright says, larger firms are enforcing the cap to avoid increased costs.
One CHRO told Wright "When we put the limit at 30 hours, we frequently had people that worked 32-34 hours, and if enough of them did so, it would put us at legal risk for fines. Therefore we now limit workers to 27 hours to ensure that we minimize the number that might exceed 30 hours."
The recent U.S. jobs report in June reported an increase of 799,000 part-time jobs compared to an increase of 288,000 full-time jobs, which may reflect the employment strategies being reported in the HR@Moore survey.
Wright says what continues to be unclear is whether the quality of employee healthcare has improved or suffered as a result of Obamacare.
"Any impact on the quality of care remains to be seen," Wright says. "It's still early in its implementation. It may take a few years before we see those impacts come through the healthcare system."
Wright has conducted the survey since 2009. Previous surveys have addressed CEO succession, human resource metrics, CEO leadership styles and executive team dynamics.