posted on 17 August 2016
from Liberty Street Economics
-- this post authored by Jason Bram and Richard Deitz
The Federal Reserve Bank of New York released the results of its August 2016 business surveys, including the supplemental survey report on health coverage costs and the effects of the Affordable Care Act (ACA) on firms in the region. Health care costs increased 8.5 percent this year and are expected to rise by 10 percent in 2017, based on the median responses of surveyed businesses.
Among the more widely mentioned factors that firms said were contributing to higher costs were increased premiums from insurance providers, higher costs for prescription drugs, the ACA, and an aging workforce.
About 60 percent of respondents to the surveys said they are making at least some changes to their health care plans in response to the ACA. The most frequently cited adjustments were raising deductibles, boosting co-pays, and increasing out-of-pocket maximums. A majority of those surveyed, however, maintained that they are not changing the range of services covered nor the size and breadth of the health care network for their health care plans.
Fewer than one in five businesses in our surveys said they are reducing the number of workers in response to the ACA. Firms were also asked if they are adjusting their mix of full-time and part-time workers; the vast majority said they are not. A minority of firms reported that they are doing at least one of the following because of the ACA: increasing the proportion of workers who are part-time, reducing compensation, and reducing other benefits. The report compares many of these findings to similar questions asked in earlier surveys.
The views expressed in this post are those of the authors and do not necessarily reflect the position of the Federal Reserve Bank of New York or the Federal Reserve System. Any errors or omissions are the responsibility of the authors.
About the Authors
Jason Bram is an officer in the Federal Reserve Bank of New York's Research and Statistics Group.
Richard Deitz is an assistant vice president in the Group.
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