The Affordable Care Act: Businesses Report Negative Impact Now and Anticipate More to Come

We just completed a survey which extensively examined the Affordable Care Act (ACA) from the perspective of the owners and C-level executives of franchise and non-franchise businesses which employ between 40 and 500 people. Dun and Bradstreet tells us that of the more than 19 million businesses in America, only about 600,000 franchise and non-franchised businesses employ this many Americans. So, why did we survey this small sliver of businesses? Because they employ over 42 million people, which is more than one out of every four jobs in America!

On behalf of the IFA and the U.S. Chamber of Commerce, we interviewed N=414 owners and C-level executives in businesses employing between 40 and 500 people in late September through mid-October.

The findings are significant and portray the likely consequence when the employer mandate goes into effect in 2015: cuts in full-time jobs and employers dropping coverage.

Key Findings:

  1. Thirty-one percent (31{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}) of franchise and 12{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222} of non-franchise businesses have already reduced worker hours because of the health care law.
  2. Twenty-seven percent (27{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}) of franchise and 12{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222} of non-franchise businesses have already replaced full-time workers with part-time employees because of the health care law.
  3. Sixty-four percent (64{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}) of business decision-makers in franchise-owned businesses and 53{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222} of non-franchise-owned businesses believe the Affordable Care Act (ACA) will have a negative impact on their businesses.
  4. Twenty-eight percent (28{09f965da52dc6ab4c1643a77bd40d1f729d807040cd8db540234bb981a782222}) of franchise and non-franchise businesses surveyed report that the employer mandate will mean they will drop coverage for their employees.

Chart 1


From the survey data, it is possible to assess the impact the employer mandate will have on businesses employing between 40 and 70 people when it is fully implemented. These employers described a specific set of actions planned for 2015 when the employer mandate goes into effect.  They say they will:

  • Cut full-time staff and cut hours of part-time workers
  • Hire only temporary help or part-time employees and strictly monitor hours
  • Stop making efforts to grow and expand business
  • Cut benefits and bonuses

In every reform, there is always an unintended consequence.  While today the focus is on the website and Americans losing coverage in the individual market, there is another dramatic impact immediately on the horizon…the way mid-size employers, who employ one out of four Americans, are going to react to the employer mandate and the consequence it will mean in lost jobs and employer provided coverage being dropped.

For the full report, please click here.

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