No matter how you feel about the Affordable Care Act (ACA or Obamacare), it is clear that employer-sponsored health insurance has become more expensive and complicated over the past several years. This reality is forcing many companies to make difficult business decisions that are impacting everyone in the employment arena.

Experts estimate that health insurance premiums for employer-sponsored plans have gone up 80-100% in the past decade. As a result, 49% of employers surveyed by Aflac for their Aflac Workforce Report stated that cost containment, including healthcare insurance costs, is their top business issue. In 2011, only 28% said the same.

“The research shows how the need to control costs is driving workforce decisions," said Teresa White, executive vice president and chief operating officer for Aflac Columbus. "For four consecutive years, we have witnessed this growing trend and can foresee the possible ramifications for the U.S. workforce."

Why Health Insurance Premium Are Increasing

Before we explore those business decisions, let's look at the drivers behind these ever-increasing premiums. First there is the ACA, which according to Forbes is driving increases in the following ways:

1. Commercial underwriting restrictions - Some examples of these restrictions include the requirement that insurers must cover participants' children up to age 26 and the elimination of pre-existing condition exclusions and lifetime limits on coverage.
2. Premiums can no longer be based on age
3. New taxes and fees on insurance companies, which are passed employers
4. The requirement that plans include "Essential Health Benefits" such as ambulatory patient services, emergency services, substance abuse disorder services, etc.

However, we must consider a number of other factors:

• Aging population
• Unhealthy lifestyles
• Expensive technological advances
• Lack of pricing information to help healthcare consumers to make cost-effective choices

Small employers often face particularly steep premium increases because their participant pool is not large enough to absorb high medical bills. Just one sick employee with high claims can easily result in a massive premium increase at a smaller organization. The same claims may not even cause a ripple at a large company.

Cost-Containment Methods

So where does the money for these increases come from? That is something each employer has to decide, and the choices are often difficult:

1. Cost-Shifting - Few employees can expect to go to the doctor and pay nothing out of pocket these days. That's because employers are selecting plans with higher deductibles, copays, coinsurance, etc., to minimize premium increases. According to the Kaiser Family Foundation, the number of workers on high deductible plans has quadrupled since 2007. Some employers are also reducing the percentage of their contributions toward employees' benefits premiums.  The end result of all of these techniques is that more of the cost is shifted to workers.
2. Increasing costs of products/services - Another option is to increase the costs of goods and services, but there is a limit to how much companies can charge and still remain competitive
3. Workforce decisions - There has been a lot of buzz about how some companies are avoiding hiring or reducing employee hours to part-time to get around the upcoming employer mandate of Obamacare. The mandate's effective date is a moving target, but it will eventually require employers with 50 or more full-time employees to provide healthcare insurance to those employees. But those subject to the employer mandate are not the only ones adjusting their workforces to contain costs. Premium increases are impacting companies of ALL sizes, not just the so-called large employers subject to the employer mandate. Therefore, these and other difficult employment decisions (e.g., freezing raises) are popular cost containment measures across the board.
4. Eliminating healthcare coverage - The cost and administrative burden of healthcare insurance is so overwhelming for some employers that they have chosen to drop coverage.  For those who fall under the Obamacare employer mandate, they will face fines eventually, but they have determined it is less expensive to "pay" rather than "play" (offer coverage).  Still, all employers risk damaging their employer branding when they drop coverage.  

Impact on YOU, the Recruiter

All of this affects you as a recruiter, as well. For example, don't be surprised if benefits start becoming a bigger part of candidate negotiations.Candidates are now more likely to consider the TOTAL compensation package offered, not just salary. You may find it difficult to recruit candidates for positions that do not include quality benefits.

Direct hire job orders may take a hit, as well, as employers try to contain costs. Your clients are still going to need to add staff to meet business demands though, so this is where contractors come in.  There is evidence this is already happening as contract staffing continues to grow. If you do not have a contract staffing component to your business, now is the time to add it.

If you are an employer (in-house staff and/or contractors), there is more of a direct impact.  You have to determine if you have to offer coverage under the employer mandate and if so, how you will do so. If you are not required to, you need to decide if you can attract quality candidates without it.  Some recruiters outsource the employment of their contractors to a contract staffing back-office that provides contractor benefits. This allows them to brand yourself as a recruiting firm of choice without taking on the cost and administrative headaches of offering healthcare insurance.

The cost of healthcare is a problem with far-reaching effects.  It is important as a recruiter to remain educated as this issue continues to evolve. You also want to be sure you put yourself in the best position to succeed by becoming a sole-source provider that offers clients a variety of staffing solutions, including contract staffing.

Debbie Fledderjohann is the President of Top Echelon Contracting, Inc.