Federal Reserve Surveys Show Impact of Obamacare on Businesses

The New York Federal Reserve has issued the results of its Manufacturing Survey and Business Leaders Survey, and the results are not good for Obamacare. How exactly are businesses responding to the Affordable Care Act? According to the report:

– Both manufacturing and service firms reported that their health care costs had gone up in 2014, with manufacturers reporting a median 10% increase and service firms a 9% increase. Both expect a 10% increase in costs for 2015.
– 35% of manufacturers and 20 percent of service firms reported that the ACA increased their costs “a lot” in 2014. 50% of manufacturers expect to see considerable cost increases in 2015, as do one-third of service firms.
– A majority of firms reported that their premiums had risen, with many businesses reporting that they were passing those costs along to their employees by requiring higher contributions.
– One-fifth of manufacturing and service firms reported reducing the number of workers on staff or raising the number of part-time employees. Another 20% said that they were reducing compensation to pay for the ACA, while 20% of manufacturing firms said that they were engaging in more outsourcing.
– 36% of manufacturers reported raising consumer prices, as did one-quarter of service firms.

The Philadelphia Federal Reserve found similar effects in its Business Outlook Survey for August. According to its survey of manufacturers:

– 18% of firms have increased the number of workers who are part-time due to the ACA.
– 13% of firms have increased the amount of work that they outsource to other firms in response to the ACA.
– Close to 29 percent of firms have increased the prices that they charge to consumers due to the ACA.
– Of the 51% of firms that have made changes to their health insurance policies, 88% increased their employees’ premium contributions, 91% increased deductibles and 76% increased out-of-pocket maximums. Additionally, 26% reported reducing the size of their networks.

As NCPA Senior Fellow John Graham said of the report, “This is real evidence that Obamacare is harming our prosperity.”

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