The Law of Unintended Consequences

Friday, August 23, 2013

 

“The law of unintended consequences is an adage or idiomatic warning that an intervention in a complex system always creates unanticipated and often undesirable outcomes.”

 

Recently, the University of Virginia and UPS announced they would no longer offer health care coverage for employee spouses if those spouses were able to obtain their insurance on their own.  Both organizations cited the Patient Protection and Affordable Care Act (PPACA) as playing a role in their decision to act at this time.

 

In October 20112, Darden Restaurants, which operates the Red Lobster, Olive Garden, LongHorn Steakhouse, and Yard House eateries indicated it would restrict the schedules of hourly workers to 28 hours per week.

 

In November, 2012, John Schnatter, Papa John's founder and CEO caused a significant uproar when it was incorrectly reported that Papa John's Pizza would cut employee hours as a result of PPACA’s mandated coverage rules.

 

A Wendy’s Nebraska franchise reportedly plans to reduce hours for non-management staff in an effort to address PPACA’s mandated coverage rules.

 

Forever21, a fashion retailer, advised workers their hours would be limited to 29.5 a week, PPACA’s mandated coverage rules sets the minimum number hours for health care at 30 hours per week.

 

Are employers beginning to react to the mandated health care requirement built into PPACA that employers with 50 plus employees and employees who average 30 hours per week must be offered health care? 

 

Will fewer employers offer health thus driving more individuals to the health care exchanges? 

 

Will there be fewer individuals with health care since the penalties are far less that the actual cost of health care premiums? 

 

Will the cost of labor rise as employees demand more in cash compensation to offset the lack of employer provided health care benefits? 

 

Will employers end up paying for health care indirectly by offsetting the coverage employees obtain through the exchanges with additional compensation? 

 

Will certain employers or certain industries continue to offer health care in order to maintain their competitive advantage? 

 

Will small employers find it increasingly difficult to keep their top talent as that talent migrates between organizations who cannot afford health care to large organizations which can?