The Affordable Care Act (ACA), also known as the Patient Protection and Affordable Care Act (PPACA), or Obamacare, refers to the landmark health reform legislation that was signed into law in March 2010 by President Obama after being passed by the 111th Congress (Kantarjian 25). The ACA includes several health-related provisions that started being effective from the year 2010. The legislation's key provisions are aimed at extending health coverage to millions of uncovered Americans, as well as implementing various measures that will reduce healthcare costs and improve the healthcare system's efficiency. It is also designed to eliminate some practices, such as rescission and denial of insurance due to various pre-existing provisions (Kantarjian 25). The ACA also includes cost-sharing subsidies and premium subsidies aimed at lowering the costs of health coverage for eligible Americans. The ACA, therefore, provides American citizens with improved health security through the creation of an inclusive health insurance reforms that expand coverage, lower healthcare costs, hold insurance companies accountable, guarantee more choices, as well as enhance care quality for all every American (Goodrich and Conway 159).
How the Affordable Care Act Impacts the employer
The Affordable Care Act (ACA) has a broad range of provisions that directly affect companies (employers), as well as the ESI (employer-sponsored health insurance) system, which provides most Americans with health coverage services. The reforms created by the ACA have had a significant effect on American employers in different ways, including through direct costs, such as taxes and fees, as well as indirect costs, such as reporting requirements and administrative fees (Kantarjian 27). Additionally, the ACA has made the health environment more complex due to cost management and regulations. As a result, most employers have been compelled to outsource most of their reporting functions and benefits to other organizations that can influence economies of scale to provide health exchange services and meet the ACA’s regulatory requirements (Kantarjian 27).
Also, since the year 2015, employers with over one-hundred employees who are full-time workers have been paying penalties if they fail to provide health insurance for such employees. The ACA defines full-time work as working for an average of more than 29 hours per week. Such a provision has made some firms to shift more employees to part-time status with the aim of reducing the total weekly work hours (Goodrich and Conway 161). Moreover, due to the enactment of the ACA, finance departments of various firms are working closely with Benefits and HR on healthcare strategy and cost. Under the ACA, various items in healthcare expenses undergo high scrutiny compared to the past, mainly due to Cadillac tax. The Cadillac tax is aimed at reducing the opulent benefits and excessive spending on healthcare (Goodrich and Conway 62).
The ACA has also affected several business lines, thereby forcing most employers to revisit their hiring strategies. The grouping of workers into full-time, seasonal, and part-time employees has greatly influenced human capital plans in most companies (Kantarjian 29). The enforcement of the ACA has also made employers reluctant in embracing some healthcare models, which they consider to be disruptive, such as permitting all their workers to enter the private or public exchanges (Kantarjian 30).
The 29/49 Rule as it Relates to the Affordable Care Act
The 29/49 rule is a regulation adopted by most companies with less than fifty employees or those whose employees work less than thirty hours per week. Such companies are not required by law, under the Affordable Care Act, to provide or offer healthcare coverage. Additionally, for such companies, the increase in employee premiums places them in a position in which they cannot afford the monthly coverage payments (Goodrich and Conway 163). Moreover, most businesses employ the 29/49 rule as a means of avoiding the Affordable Healthcare Act’s draconian requirements by either employing workers for less than 30 hours per week or hiring less than 50 workers. However, employees struggle to cope with the 29/49 rule since employers are limiting themselves to 49 employees to avoid the Obamacare’s mandates, which would compel them to provide insurance coverage for their employees (Kantarjian 33).
Impact of the Affordable Care Act on Employee Working Hours
Following the enactment of the ACA, most businesses have decided to cut back employee working hours by accommodating some workers on a part-time basis to avoid providing the employees with health insurance. Such companies have evaluated the cost of insuring full-time employees and realized that it would not make business sense to spend more on employee insurance and pay employee compensations at the same time (Goodrich and Conway 165).
Additionally, Obamacare allows states to expand their Medicaid services, which makes it possible for several people in various expansion states to have health coverage without being employed. Before the ACA's enactment, low-income individuals who were not eligible for Medicaid had to work for more hours to secure health insurance (Goodrich and Conway 167). However, other people on the Medicaid program may still work for more hours, under Obamacare, to have a higher income eligibility threshold that will enable them to remain on the program with more wages. Also, under the ACA, individuals in non-expansion states whose incomes are below the poverty line have to work for more hours to become eligible for subsidized health coverage (Kantarjian 36).
In overall, the ACA is sophisticated, with several provisions that create significant changes to the labor markets, health insurance, and the national economy. It will, therefore, take some time for a more accurate picture of its impacts to be seen. However, it is already evident that the ACA has lowered employees' working hours, as well as their compensation due to the employers' new practice of avoiding full-time employment.
Works Cited
Goodrich, Kate, and Patrick H. Conway. "Affordable Care Act Implementation: Implications for Hospital Medicine." Journal of Hospital Medicine 8.3 (2013): 159-168. Web.
Kantarjian, Hagop M. "The Affordable Care Act, Or Obamacare, 3 Years Later: A Reality Check." Cancer 123.1 (2016): 25-38. Web.
