Effects of Legislation on HR Outsourcing

Effects of Legislation on HR Outsourcing

Analyze the effects of legislation on HR outsourcing.

In 2011, American employers had outsourced business administration activities more significantly. The rate of outsourcing these services grew by 12.5 percent and exceeded the $5 billion mark (Miller, 2011). The need to outsource is fuelled by the employers’ desire/obligation to comply with different healthcare reforms that are being instituted to ensure patient safety. In addition, healthcare providers reduce costs significantly through outsourcing. Improved engagement of employees is a significant benefit of the outsourcing process.

New laws that are created to ensure that patients access care easily and safely stimulate increased outsourcing of health care and related benefits. In 2010 and 2011, American healthcare experienced more regulations that sought better regulations of health insurance. Providers and care facilities use the opportunity to understand the new reforms through outsourcing (Miller, 2011). In terms of cost, the outsourcing process allows the players to identify any cost savings that are present with these new reforms. Most importantly, they seek an opportunity to integrate the reforms with their cultures and learn how to navigate the new complexities.

The ability of healthcare providers and other players in the sector to comply with the new reforms improves their competitiveness significantly. Compliance with regulations that govern the administration of healthcare is one of the aspects that determine the accreditation of players in the sector (Miller, 2011). A facility or healthcare provider that is not accredited by the relevant agencies is less likely to market its services and products effectively. This simple yet critical aspect drives down its competitiveness and could lead to closure.

Table 1: Legislation Effects

The Affordable Care Act has had a different impact on healthcare providers at different levels. Within the state and federal levels, employers are required to provide coverage for employees depending on the number of permanent staff. Those with more than 50 full-time employees should offer coverage or face penalties. Those with less are expected to purchase coverage plans from other Small Business Health Options Program (SHOP) providers within the marketplace (Blavin, Garrett, & Blumberg, 2014). The legislation has increased outsourcing and provided an opportunity for more health option providers to venture into the sector.

Increased outsourcing of health care plans by employers has resulted from the ACA legislation. The main driver behind outsourcing is to comply with the law and avoid penalties that may arise from failure to do so. In addition, employers who comply create a better public image and are likely to receive accreditation and certification to operate.

Evaluate the effects of federal legislation requiring universal health care coverage on the outsourcing of health care in the U.S.

The new legislations that were instituted during President Obama’s tenure have a significant effect on outsourcing. The Patient Protection and Affordable Care Act of 2010 (PPACA) compelled the upcoming healthcare providers to reduce full-time employment ( Outsourcing Law Global, LLC, 2013). To avoid the financial obligations that come with the full-time employment of more than 50 employees, such entities prefer to engage third-party suppliers and temporary staff members. Small organisations have found it necessary to cut back on employees in the back office, which generates minimal income.

As a result, increased outsourcing by small businesses in the healthcare sector may lead to a boom in third-party service providers. The increasing demand for various services that ensure compliance with different regulations will not only lead to more service providers but also a significant increase in cost ( Outsourcing Law Global, LLC, 2013). The motivation to join the sector as a third-party service provider is connected to low start-up costs and a potentially great return on investment.

Finally, the process eventually results in the offshoring of various services to foreign countries. To support the increasing demand for outsourced services, small healthcare providers will contract companies and individuals in different nations to carry out non-essential services such as bookkeeping, customer service, and management of social media sites ( Outsourcing Law Global, LLC, 2013). The decision to offshore is motivated by the need to reduce the costs of operation, which would otherwise increase the third-party providers set up in the USA.

The HR professionals can conduct awareness campaigns, which educate employees on the PPACA. Employees should not rely on information obtained from public sources regarding health regulation. Employers are responsible for informing employees and ensuring they understand the law. Ongoing education programs and communication platforms should be established to ensure that this knowledge is shared (SHRM, 2020). This facilitates understanding of the value that the regulation offers to employees and the decisions that the employer makes to ensure compliance.

References

Outsourcing Law Global, LLC. (2013). Obama’s Outsourcing and Offshoring Promotion Program.

Blavin, F., Garrett, B., & Blumberg, L. (2014). Monitoring the Impact of the Affordable Care Act on Employers. Urban Institute. Retrieved from https://www.urban.org/sites/default/files/publication/33696/413273-Monitoring-the-Impact-of-the-Affordable-Care-Act-on-Employers.PDF

Miller, S. (2011). Health Care Reform Accelerates Benefits Outsourcing. Retrieved from https://www.shrm.org/resourcesandtools/hr-topics/benefits/pages/benefitsoutsourcing.aspx

SHRM. (2020). Complying with the Affordable Care Act. Retrieved from https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/complyingwithandleveragingtheaffordablecareact.aspx

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Assignment: Effects of Legislation on HR Outsourcing

The stated goal of the Patient Protection and Affordable Care Act (PPACA) is to give more Americans access to health care. But relative to the topic of outsourcing, it may also be causing an increase in benefits administration outsourcing, as employers, especially those that are smaller, seek help in navigating the uncertain, complicated, ongoing health care-reform measures.

Effects of Legislation on HR Outsourcing

When facing the massive reporting and compliance requirements required by the new health care laws, many smaller and mid-size employers will seek more outside assistance/partnering. Many of them lack the back-office support to meet the PPACA’s regulations and it is not a skill they want to make a core competency (Starner, 2011).

Using the 5C model (culture, costs, competencies, compliance, competitors), analyze how new laws would specifically stimulate increased outsourcing of health care and related benefits. Consider examples at the local, state, and federal level of changes in laws/regulations that either increased or decreased business partnering and outsourcing. For example, why would a federal requirement for universal health care coverage increase HR outsourcing?

To complete this Assignment, respond to the following in a 3- to 4-page paper:

• Analyze the effects of legislation on HR outsourcing.
  • Using the 5C model, analyze how new laws requiring universal health care would specifically stimulate increased outsourcing of health care and related benefits.
  • Using the table provided in this week’s Learning Resources (Effects of Legislation on HR Outsourcing), do research to fill in five of the nine cells illustrating the effects of local, state, and federal legislation on HR outsourcing.
    • Provide a brief description/explanation of each.
    • Identify whether the legislation increased, decreased, or had no effect on HR outsourcing.
  • Evaluate the effects of federal legislation requiring universal health care coverage on the outsourcing of health care in the U.S.
    • From your research, describe three specific affects you think such legislation would have on outsourcing of health care.
    • What specific actions can HR professionals take to enable employees to navigate the complexities of PPACA?

Resources

• Bridgeford, L. C. (2011). Are you in or are you out?: In the wake of health care reform, it remains to be seen whether employers will dive into HR outsourcing. Employee Benefit News, 25(3), 26. Retrieved from https://ezp.waldenulibrary.org/login?qurl=https%3A%2F%2Fwww.proquest.com%2Ftrade-journals%2Fare-you-out%2Fdocview%2F859583699%2Fse-2%3Faccountid%3D14872
• Gibbs, R., & Humphries, A. (2009). Strategic alliances and marketing partnerships: Gaining competitive advantage through collaboration and partnering. London, NI: Kogan Page Limited.
• Kwicien, J. (2012). Finding the ideal partner: Selecting the right partner requires focused consideration of the attributes that make up the ideal partnering relationship. Employee Benefit Adviser, 10(2), 44. Retrieved from https://ezp.waldenulibrary.org/login?qurl=https%3A%2F%2Fwww.proquest.com%2Ftrade-journals%2Ffinding-ideal-partner%2Fdocview%2F922256598%2Fse-2%3Faccountid%3D14872
• Lusk, M. (2010). Build versus buy in the current biotech market environment. Biopharm International, 23(9), 18-21. Retrieved from https://ezp.waldenulibrary.org/login?qurl=https%3A%2F%2Fwww.proquest.com%2Ftrade-journals%2Fbuild-versus-buy-current-biotech-market%2Fdocview%2F750491481%2Fse-2%3Faccountid%3D14872