Effects of PPACA on the Staffing Industry | DCR Workforce Blog

Effects of PPACA on the Staffing Industry

With any new law that comes into force, there are bound to be worries and concerns raised from people who fear any changes to the status quo. When the legislation is complex and details are unclear, the level of concern and controversy increase dramatically.  The PPACA (Patient Protection and Affordable Care Act) is one such act which has everyone pondering over the changes it would bring.

We are weeks away from marking the three-year anniversary of the passage of this legislation, which has become the poster child for the “FUD Principle” – the notion that people can be manipulated into believing anything if you introduce enough Fear, Uncertainty and Doubt (FUD).  The PPACA is aimed primarily at decreasing the number of uninsured Americans and reducing the overall costs of health care.  However, we constantly hear of potential unintended consequences:

  • The “least common denominator” could prevail, providing everyone with lower quality healthcare at higher costs and increased administrative burden
  • Taxes could increase to offset the cost of implementing this legislation
  • This legislation could drive many private healthcare insurers out of business
  • Employers could find that it’s less expensive to pay fines for not providing healthcare to workers than it is to fund the mandatory employee healthcare plans

One question that has not received nearly as much discussion is the impact the PPACA will have on the use of contingent workers. Today, most contingent workers who are serving as contractors employed by a staffing agency are offered low premium or mini-med plans, or are given the option of participating in plans offered to staff employees, but without the benefit of employer contribution to the costs of these benefits.  Contingent workers serving as independent contractors are considered to be self-employed, and therefore personally responsible for their healthcare.

Will PPACA result in an increase in the use of contingent workers?

Some may argue that employers may want to reduce the size of their direct workforce – and the costs associated with insuring these workers – by relying more heavily on contingent workers.  However, when staffing agencies find that they are facing increased costs associated with providing healthcare insurance coverage to meet minimum standards (i.e., greater than what is today offered in a “mini med” plan) tend to pass such costs on to their customers, reducing the attractiveness of agency contractors as a workforce option.

Individuals who today opt to freelance as independent contractors may find the cost of private insurance prohibitive.  If they reside in a state that has not implemented a health care exchange, the fear of non-coverage or the headache of trying to qualify for and enroll in a state-run program may cause them to reconsider temporary assignments.

For now, we continue to wait and see.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.