Although the employer mandate provision of the Affordable Care Act (ACA) has effectively been delayed again, there seems to be a renewed "buzz" around the healthcare reform law, often known as Obamacare. Maybe it’s because workers are now required to carry insurance, or maybe companies are just being proactive. But for whatever reason, we are noticing an increase in the number of recruiters asking how Obamacare will affect hiring and recruiting.
Of course, that is anyone's guess, but a recent report by the Congressional Budget Office (CBO) offers some insight. It estimates that the ACA could lead to a decrease of 2.5 million jobs by 2024. A large reason for this is that people will be exiting the workforce because they no longer have to work to get health insurance, according to the report. Instead, they can shop for insurance in the Obamacare-created Marketplace, or they may benefit from the expanded Medicaid program. But the employer mandate will play a role as well. The employer mandate will require employers with 50 or more full-time or full-time equivalent employees to provide healthcare insurance that provides “minimum essential coverage” to full-time employees. The CBO reports this will result in positions and hours being cut as companies try to avoid the provision. There is no evidence of this yet, but the CBO stated the real impact won't be seen until the mandate takes effect in 2015 (and even later for some employers, based on the employer mandate final regulations).
No employer wants to hear about a negative impact on hiring. But don't despair. Many companies will choose another route - contract staffing. Some recruiters are already seeing an increase in request for contractors and longer assignments as companies adopt a blended workforce model as we discussed in our most recent Contracting Corner. In this model, companies maintain just a small core of traditional employees who are the key personnel with the knowledge and experience that can make or break the business. That core is surrounded by a larger outer ring of contractors who handle the day-to-day tasks and critical projects. This trend will further drive the growth of contract staffing.
Many recruiters are preparing their firms to take advantage of this situation. They are marketing contract staffing services and educating themselves on the ACA so they can serve as a resource for their clients. And they are working with contract staffing back-office providers that can handle all of the financial, administrative, and legal tasks, including providing ACA-compliant healthcare coverage. Other recruiters would be wise to follow their lead.