Employer Healthcare Strategies


3 Macro Consequences of the Affordable Care Act

Posted by Jeremy Cavness on January 14, 2015

medical-regWith 6 million and counting Americans signed up for coverage through the Patient Protection and Affordable Care Act (PPACA), more widely known as ‘ObamaCare,’ how does this groundbreaking health care shift affect your business? Though on the surface, PPACA primarily impacts employees of smaller organizations with under 100 full-time employees, before you begin counting your coworkers, let’s discuss PPACA’s macro effects.

Overwhelmed Providers

As the PPACA’s enrollment numbers grow, so does the number of insured American lives vying for your spot in medical waiting rooms. This wait is intensified by a projected primary care physician shortage of over 52,000 by 2025.

Most companies are already struggling to provide strong benefit packages to their employees via commercial insurance. This shortage of providers is going to make it even harder. As long as employees and their dependents remain forced to rely on the public, fee-for-service primary care system, wait times will increase, costs will continue to rise, and organizational productivity will fall.

Increased Out-of-Pocket Expenses

In addition to the change in quantity of covered Americans, so will the type—specifically those with pre-existing conditions. To account for this risk pool increase, commercial insurance providers must adjust premiums accordingly. Who pays for this cost increase? You and I, yes, but primarily businesses. 

Though this is an obvious downside to commercial insurance, it's not necessarily their fault. Carriers are essentially being forced to offer coverage to those considered to be high-risk. In Vegas, this is called a bad bet. The odds of these high-risk individuals over utilizing the system and driving up cost is very good. To remain compliant and profitable, carriers have no choice but to "pass through" the cost of this added risk to others in the plan.

That being said, who wants to pay for someone else's high-risk employees? Not me. If there's ever been a time to look into self-insurance, it's right now.

More Paperwork

Your human resources department and third-party administrator will likely be staffing up (i.e. adding cost) to help manage the influx of confusion. But they aren’t the only ones bracing for the inevitable paperwork deluge that comes with regulatory change. The 2012 tax year W-2 reporting changes were only the beginning. 

Employees forced to shop the exchange will be doing more studying than they have since their college days. Maybe this is a good thing? My money is on the opposite, though. Employees already hate and don't understand their benefits. The work that comes with understanding how to get the most out of the exchange will only heighten their frustration. 

Frustrated employees can easily become disengaged, which ultimately costs businesses money. Gallup has estimated that that employee disengagement costs the overall US economy as much as $350 billion every year. That's a significant figure for something that could be considered easily preventable. 

Specific expenses contributing to those billions probably vary, but a few costs generally associated with employee disengagement include:

  • Increased number of sick and absent days
  • Decreased productivity, which Gallup estimates could be $3,400 to $10,000 in salary.
  • Missed deadlines and poor overall results
  • Customer complaints. According to People Metrics, "Disengaged employees create disengaged customers because frustrated workers can’t help but pass on their cynicism and negativity."


It is much too soon to forecast the future of health care and the Affordable Care Act. It will be 10 years minimum before the industry begins to settle; however, these macro effects are inevitable results of a crowded health care system composed of an increasingly unhealthy population.

Jeremy Cavness

About The Author

Jeremy Cavness

Jeremy is a former CareATC marketing team member.

Post Topics Health Reform