Survey Finds Affordable Care Act Already Hurting Businesses, Jobs

Months before the Affordable Care Act (ACA) fully takes effect, it is already having negative effects on business and hiring in the US.

I have written previously that the Affordable Care Act (ACA) is a looming debacle that will make it harder for Americans to obtain quality medical care, reduce physician productivity and autonomy, and raise the cost of health care in this country. Now we have further confirmation from the very employers that provide health benefits to millions of Americans that the ACA is already having negative effects on business and hiring in the US.

According to a recent report on CNBC, small business owners are already so fearful of the effect of the ACA on their bottom line that many are holding off on hiring for the foreseeable future. In some cases, firms are laying off workers in anticipation of the ACA’s impact on their finances and bottom line.

The law firm Littler Mendelson, which is “exclusively devoted to representing management in every aspect of labor and employment law,” commissioned a Gallup poll of more than 600 business owners whose firms have less than $20 million in annual sales.

Among the poll’s findings:

• 41% of the businesses surveyed reported they have frozen hiring because of the anticipated effects of the ACA

• 19% said they had “reduced the number of employees they have in their business” as a specific result of the Affordable Care Act

• 38% of business owners said they “have pulled back on their plans to grow their business” because of the ACA

• 48% of respondents said they think the ACA will be bad for their bottom line (39% said the ACA will have no impact on their bottom line, while 9% predicted the ACA would be good for their business)

• 55% of small business owners believe that the ACA will lead to higher health care costs (just 5% predicted lower health care costs due to the provisions of the ACA)

• 52% expect a reduction in the quality of health care under the ACA (13% foresee improved quality of care once the ACA takes effect)

• 24% percent said they are actively considering whether to drop insurance coverage for their employees

• 18% have “reduced the hours of employees to part-time” in anticipation of the ACA's effects

Steven Friedman, co-chair of the Employee Benefits Practice Group at Littler Mendelson, told CNBC, “We don't know until 2014 and beyond what the impact of the ACA will be on businesses… There is tremendous fear that the premiums will be much higher, for small businesses especially. At this point we can't look a client straight in the eye and say, 'Don't worry about it. Everything will be fine.' "

Friedman also said that although his firm knew that “employers were concerned about the Affordable Care Act and the effects it would have on their business,” he and his colleagues were “startled” by the survey results. “We didn't realize the extent [to which] they were concerned, or that the businesses were being this proactive to make sure the effects of the ACA actually were minimized,” he said.

Make no mistake: more and more evidence is piling up that, contrary to what its supporters promised, the ACA will be unable to provide better, lower-cost health care to more Americans.