The fall months brought about a government shutdown, near default and the wildly incompetent implementation of the Affordable Care Act (ACA). These factors have created a significant and harmful level of uncertainty for manufacturers in the United States, so it is unsurprising that respondents to the Q4 2013 National Association of Manufacturers (NAM)/IndustryWeek Survey of Manufacturers had strong reactions to these topics. The survey results strongly state that the ACA has had a highly negative impact beyond the health care market, and manufacturers’ concerns are unlikely to fade.

Skyrocketing health care and insurance costs retained their ranking as the top business challenge for manufacturers, cited by 77.2% of respondents (Figure 1). This issue has ranked the highest in terms of primary challenges all year, and in essence, it has served as a proxy for frustrations with the ACA. With that in mind, we asked respondents a series of special questions about how the ACA has impacted their business.

The numbers paint a picture of a health care system that has forced many manufacturers into making some difficult decisions. Most importantly, 90.6% of manufacturers said their health insurance premiums had increased (Table 1). Beyond that, some of these firms have also had to increase employee copays (58.6%), reduce coverage (27.7%) and/or change insurance providers (17.6%) to lower their costs. Even after taking these steps, the average increase in health insurance costs within the manufacturing sector for 2014 was 8.76%, with just more than three-quarters of respondents saying their increase was at least 5.0%. 

According to the survey, the ACA and the accompanying uncertainties have had effects that extend well beyond premium payments and have placed a roadblock in manufacturers’ efforts to invest and grow. When asked about how these uncertainties have impacted their business (Figure 2), nearly one-third said they had reduced their outlook for 2014, and a sizable percentage had reduced employment or stopped hiring (23.1%) and/or reduced or slowed down their business investment (20.2%). While some industry sectors have reduced hours for their employees, a relatively small number of manufacturers have done so as a result of the ACA (7.9%). Given the fragile economy and continuing high unemployment levels, the impact of the ACA is clearly being felt far beyond the health care market, and these concerns will likely continue well into the future.

While health care was the top concern for manufacturers in the fourth quarter, the second most pressing challenge was an unfavorable business climate (cited by 76.1% of respondents). Many sample comments from respondents, both this quarter and in previous iterations, have mentioned the need for pro-growth policies, such as those laid out in the NAM’s Growth Agenda. (For a partial listing of comments in this survey, see the end of this article.) Policymakers will continue to have opportunities to implement a pro-growth agenda as the 2014 legislative year begins.

                On the issue of fiscal spending, the most recent government shutdown zapped consumer and business confidence, and the prospect of yet another budget impasse in January creates more uncertainty in the marketplace. With that in mind, 86.3% of manufacturers want the president and Congress to find a long-term solution to the nation’s budgetary challenges—a top priority for 2014 (Figure 3).

In addition, other policies that manufacturers want to see from policymakers in 2014 include slowing the growth of entitlement spending (80.5%), reducing the regulatory burden on businesses (76.9%), controlling rising health care costs (70.8%) and passing comprehensive tax reform (67.5%).