CEOs: Obamacare Uncertainty Harming Economic Rebound

Wednesday, 04 Dec 2013 01:43 PM

 

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Uncertain corporate costs for President Barack Obama's healthcare reform law and other regulations continue to stymie U.S. employment and capital spending, business leaders said on Wednesday.

Roughly 39 percent of U.S. chief executives cited regulatory costs as their top concern for the next six months, according to a survey released by the Business Roundtable, a confederation of top U.S. companies.

The group said uneven implementation of the healthcare law, commonly known as Obamacare, has made it tough for businesses to decide where to allocate capital for new construction or hiring.

"There seems to be an exception every other day on the Affordable Care Act," Jim McNerney, head of the Business Roundtable and chief executive of airplane maker Boeing Co , said in a conference call on Wednesday, using the law's formal name.

"Is your preferred constituency going to get an exception or not? It's hard to know, so people respond by hedging investment and hedging employment."

Parts of the law requiring employers to provide healthcare for their workers was delayed earlier this fall until 2015 by the White House, though it remains unclear if that will be made permanent.

Broadly, U.S. companies remain concerned about taxes on so-called "Cadillac" health care plans, premium plans which many offer to employees, as well as efforts to cut costs of medical services, which could boost insurance premium costs for companies and employees, McNerney said.

"There's no doubt that many in the American business community are concerned about the impact of Obamacare on their healthcare costs," he said.

The 7.3 percent U.S. unemployment rate has ticked down from a recent high, and data released on Wednesday showed U.S. private sector hiring rose in November at the fastest pace in a year even as the service sector slowed.

CEOs also remain concerned about pending carbon emission regulations from the U.S. Environmental Protection Agency, and increased oversight from the U.S. Department of Labor, he said.

Beyond Obamacare, U.S. CEOs believe the economy is modestly improving, with sales, capital spending and hiring all expected to rise in the next six months.

Ironically, McNerney said healthcare companies themselves stand to benefit from Obamacare spending.

"Certainly it does bring some additional revenue to companies that participate in the healthcare world," he said.

The Business Roundtable's CEO Economic Outlook Index rose to 84.5 for the fourth quarter from 79.1 in the third quarter.

A reading above 50 indicates economic growth is expected.

CEOs' expectation for 2013 gross domestic product growth was 2.2 percent, unchanged from the last quarter.

The Roundtable surveyed 120 members between Nov. 4 and Nov. 21.

© 2014 Thomson/Reuters. All rights reserved.

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