61% of Businesses Expect Reform Law To Increase Their Costs, Survey Says

Sixty-one percent of businesses expect to pay more for their workers' health coverage when the Affordable Care Act fully takes effect in 2014, according to a survey of 1,203 companies conducted by Mercer, the Los Angeles Times' "Money & Co." reports.

Survey Details

The survey found that 20% of respondents said they expect their costs to increase by at least 5% (Terhune, "Money & Co.," Los Angeles Times, 8/8).

Under the health reform law, employers with 50 or more full-time employees must offer affordable and qualifying coverage. If an employer fails to offer the benefits or if even one worker is forced to depend on government subsidies to purchase insurance, the employer must pay a penalty (Radnofsky, Wall Street Journal, 8/8).

According to the Mercer survey, 25% of respondents expect to make changes to their health benefits plans to avoid the penalty, and 6% anticipate potentially dropping health coverage because of the ACA.

About one-fifth of respondents reported that they would hire workers who would eligible for Medicaid under the law's expansion. However, many states have yet to make a decision on whether they will participate in the expansion, Politico reports.

Although the majority of employers said they are prepared to meet the requirements of the ACA provisions, 11% are delaying preparations until after the November elections.

Retail, Restaurants Poised To Be Hit Hardest

According to Politico, the retail and hospitality industries, which typically employ the most number of part-time employees, are expecting to face large health care cost increases, with about 46% expecting increases of at least 3% (Smith, Politico, 8/8).

In the two industries, about 9% of employers plan to drop health coverage because of the law, the Wall Street Journal reports. Employers that do not already provide coverage are more likely to be considering cutting back on employees' work hours to circumvent the overhaul's coverage requirement, the Mercer survey found (Wall Street Journal, 8/8).