Report: Two-Thirds of Businesses Expect Health Cost Hike

by Alexander Kazam

It’s not just Papa John’s: A new survey of more than a thousand employers finds that a substantial majority are bracing for an increase in the cost of their health plans, which will make it more expensive to hire and retain employees and will increase the price of goods and services to consumers. Via Politico:

Nearly two-thirds of employers expect to see a cost hike in their health plans when the Affordable Care Act goes into effect in 2014, and a quarter say they will have to make changes to their coverage to avoid penalties, according to the survey by the Mercer consulting firm. 

Retail and hospitality industries, which typically employ larger numbers of part-time workers, are bracing for the biggest increase in costs — 46 percent said they’re expecting costs to increase by a minimum of 3 percent. The health care industry is close behind, with 40 percent expecting that increase in costs.

This is a textbook example of how Obamacare “shrinks the pie” (maybe literally in the case of Papa John’s) of economic activity by imposing new burdens on businesses. Some consumers may scoff at a 15–20 cent increase in the price of a pizza, but when this much of the economy is affected, it starts to add up. Note the irony that the health-care industry, which employs a lot of part-time workers, itself expects a significant uptick in costs (so much for bending the cost curve down).

The Mercer survey also finds that 6 percent of employers plan to drop their coverage as a result of the law. A similar study by Deloitte a couple of weeks ago put that figure at one in ten.

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