The Leaflet: Employer Mandate Hinders Business Success and Growth

Published October 9, 2014

 Employer Mandate Hinders Business Success and Growth

On October 7, Wal-Mart Stores Inc., the largest private employer in the United States, announced in a blogpost it will no longer provide health insurance to employees who work fewer than 30 hours a week, a change that will impact 30,000 employees. Following in the footsteps of a number of other companies, including Target and Home Depot, Wal-Mart also announced health insurance premiums will increase for its 1.3 million workers beginning January 1.

U.S. businesses clearly are bracing for the employer mandate to take effect under the Patient Protection and Affordable Care Act (PPACA). Beginning in January 2015, companies with 50 or more employees will be required to offer health insurance to those working at least 30 hours a week or pay a fine. 

report from the American Health Policy Institute (AHPI) finds PPACA will shrink the labor force by decreasing incentives to work, concluding the law inflicts on businesses “additional costs of $4,800 to $5,900 per employee over the course of a decade.” AHPI also finds the total cost of the law to American employers will be between $157 billion to $186 billion over the next ten years.

In a survey conducted by the Federal Reserve Bank of Philadelphia, 18 percent of businesses reported they have cut the number of employees and reduced hiring due to costs imposed by PPACA.

The employer mandate encourages businesses to avoid the cost and penalty of coverage by hiring part-time employees rather than full-time employees. Once businesses are released from health care costs, their employees will go to the government to get coverage, which will shift the cost burden to taxpayers. As PPACA’s full implementation approaches, its increased complications and costs are expected to considerably hinder business success and growth.

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