The multinational consulting firm Deloitte surveyed 109 North American chief financial officers of major companies from February 7 through 21. Besides a drop in optimism about the economy, the CFOs’ thoughts on health care, and changes from Obamacare/the Affordable Care Act, are particularly interesting:
Last quarter’s findings indicated the ACA had caused 40% of U.S. companies to pass (or to consider passing) health care costs onto staff, and had also caused 32% to increase their focus on wellness management. This quarter shows CFOs expect the use of both tactics to rise as implementation gets closer:
Heavy focus on wellness: Two-thirds of CFOs say they expect to increase their focus on health and wellness.
Passing on health care costs: Sixty percent of CFOs say they plan to pass health care costs on to staff, and 12% expect to pass costs on to customers (Energy/Resources is the most likely to cite this approach).
Changing coverage: Twenty-three percent of CFOs say they expect to reduce the scope of benefits offered to some staff, and 16% expect to reduce the level or value of benefits provided. While just 10% of CFOs overall anticipate offering new coverage to staff not previously offered benefits, more than half of CFOs in Retail/Wholesale expect to do so.
Some drag on earnings: Eleven percent of CFOs say they expect to reduce their earnings forecasts as a result of measures undertaken in response to the Act, roughly the same proportion that had already done so as of 4Q13. The effects appear strongest in Services, where 43% of CFOs expect to reduce their earnings forecasts.
No major impacts on hiring or staffing mix: Just under 7% of CFOs say they expect to constrain hiring, and the same proportion expects to reduce employee hours to create more part-time positions.
It may not qualify as a major impact, but 7 percent of companies constraining hiring and 7 percent shifting workers to part-time is still bad economic news. Even worse, the rest of the survey indicates companies don’t expect to be doing much hiring in the near future:
Domestic hiring expectations declined to just 1.0%, below last quarter’s 1.4% and among the lowest in the history of the survey. The median is again 0.0%, and variability of responses is very high. Forty-two percent of CFOs expect year-over-year gains (comparatively low), and 18% expect 4% cuts (comparatively low).
Country-specific expectations are 1.1% for the U.S. (1.7% last quarter).
Remember the message back in January? “Democrats are confident that a strong economy in 2014 will help them retain their Senate majority.”