The linkage between economic actions is complex and almost incomprehensible, as the impact of each act spreads to other parts of the economy and causes other events, creating a state of flux.
Lewis Black admitted in all candidness, “I took economics, and I’d explain it to ya, but I flunked that course. Not my fault. They taught it at 8 o’clock in the morning. And there is absolutely nothing you can learn out of one bloodshot eye.”. Now we have Ray Dalio, whose hedge fund, Bridgewater, netted him a personal fortune of $13 billion, is revealing economic principles in simple terms, with tips which helped him to predict macroeconomic cycles in a YouTube video titled How the Economic Machine Works. As I could access the video much later than 8O’clock and without bloodshot vision, I was wishing the insights would translate to my understanding of the latest news concerning the Affordable Care Act.
Now that the Act is moving into an active phase, and the health exchanges have opened up; I have my antennae up to understand its implications not just for employers, but also staffing companies who would have to fulfill their role as employers to the temporary workers they deploy with various clients.
Sure enough, I was immersed in this piece of news which covered a boutique staffing company. I have attempted to summarize their story here:
Pay or Play?
With a law like ACA which allows an employer to choose whether to pay or play – the staffing firm now has 2 options.
The questions to be asked are: Do we understand at a macro-level the overall economic impact of this legislation? Does it extend healthcare at the expense of jobs? What is the true cost to a mid-tier company of complying with ACA, and can that cost be borne in light of the impact of the recent recession?
These questions may have been asked, but they have not been answered. The Act set out to address the fact that there were 49.9 million Americans (or 16.3%) whose healthcare was uninsured (Census, 2010) We are told that Americans die every year because they have no health insurance and 62% of all bankruptcies are filed by people whose medical expenses went too high.
It is a hard act to juggle two such opposing claims. We need to avoid the law of unintended consequences. Without a true and clear understanding of the total financial impact of ACA on businesses, we are reminded of the old silent movie image: the villain evicts a widow with a flock of young children saying “You must pay the rent!” while the poor widow says, “But I can’t pay the rent!”
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