CNBC today cited a Tower Group survey finding that 40% of companies are planning to considering changing their health care plans in 2014-2015 due to the Affordable Care Act, better known as Obamacare. A full 60% of companies reported that they are considering shifting health care to the insurance exchanges at some point.
Those figures may seem at odds with the same survey’s finding that 98% of companies have no definite plans to switch employees to the health care exchanges. It could just be that there remains so much uncertainty that companies figure they don’t have the confidence to make a decision on so big an issue, especially with reports of states not being ready, regulations still being revised, deaadlines being pushed back, etc.
Health insurance for employees is a huge cost to employers. More than 80% of Firms with over 25 employees offer health insurance and typically pick up 80-90% of the total premium cost, which can run $12,000 or more each year for each employee. Round it off to a business expense of $10,000 a year per employee, a figure that has been increasing fast enough to double the expense every 10 years.
It is this very uncertainty over a sizable issue that has so many companies today hanging on to a ton of excess cash. That is a dampener on the growth of companies and the overall economy. That’s been a very consistent theme since 2008.
Normally, the stock market hates uncertainty but that has been overwhelmed by the goosing effect of Fed stimulus over the last few years and the continuing momentum of moving up from the low prices and panic at the 2009 lows.