The employer mandate is one of the key features of the Affordable Care Act of 2010. This report presents findings from a survey of agricultural firms about their perceptions of the employer mandate. In 2014, just prior to the implementation of the employer mandate, we conducted a survey of producers and processors of labor-intensive crops, including apples, grapes, and potatoes, in Washington State. The labor-intensive agriculture industry in Washington State heavily relies on seasonal and part-time workers, and thus has a large potential to substitute capital for labor through mechanization. We found that large employers and those already offering health insurance coverage were 28 percentage points and 48 percentage points more likely to offer employer-sponsored health insurance in the future, respectively, compared to small firms and those not offering health insurance at the time of the survey. Grape growers were 13 percentage points less likely to provide coverage in the future compared to apple growers and other agricultural businesses.
The Affordable Care Act (ACA) aims to increase the number of insured individuals through two mandates: the individual mandate and the employer mandate. At the time of its inception and initial implementation, there was significant resistance to the ACA from much of the business community, which argued that it would make workers worse off as businesses adapt to changes in relative factor costs. Some aspects of the structure of the ACA also have the potential to employ adaptation strategies with implications for industry structure. For example, the association between business size and the requirement to provide health benefits to workers may create disincentives to expand from a small firm to a mid-size firm. This potential is likely greater in industries that have experience in hiring varying numbers of workers throughout the year at different work schedules, which certainly describes the agriculture industry including both farms and downstream processing. Also, as opposed to much of manufacturing, there is still significant room to increase mechanization to substitute capital for labor in agricultural production. All else constant, the implication is that farm businesses are in a position to shift any increases in labor costs associated with the ACA to workers in the form of lower wages or reduced employment.
Our survey aimed to improve understanding of (1) the current provision of employer-based health coverage, (2) how well agricultural operators understand which businesses are subject to the employer mandate of the ACA, and (3) agricultural operators’ perceptions of how the ACA will affect their businesses and how they are likely to respond to its implementation. Before presenting the findings from our survey, we briefly review the existing literature on how farm workers value fringe benefits. Fringe benefit refers to the various ways workers are compensated other than through wages and salaries. Health insurance is one type of fringe benefit.