The new Republican majority in Congress is out of the gate swinging at Obamacare this week, aiming for one of the law’s most debated provisions: the employer mandate.
Under the Affordable Care Act, businesses with at least 50 employees must provide health insurance to their full-time workers or pay a fine. The business lobby has made no secret of its loathing for the mandate, and the requirement has already taken a hit, with President Barack Obama’s administration delaying the implementation in 2013.
Republicans now seek to escalate that hit into a full-on pummeling. Wednesday’s political drama centered on what, exactly, constitutes “full time.” Republicans, including Maine Sen. Susan Collins, want to define full-time workers as those who work at least 40 hours a week. The House took up the legislation Wednesday, with a vote scheduled on Thursday, and Collins touted her bipartisan companion bill — first introduced last June with Sen. Joe Donnelly, D-Indiana — during a Wednesday morning news conference, just hours after Obama issued a fresh veto threat.
Forty hours sounds straightforward enough, right? That’s the standard American workweek.
But the law defines full time as 30 hours a week.
Why the controversy?
Employers must pay up. This affects businesses with at least 50 “full-time equivalent” employees, a calculation that can also include part-time workers. (Two employees who each work 15 hours a week equals one full-time equivalent). If a business doesn’t offer decent, affordable insurance to its full-time workers, it must pay a $2,000 fine per employee (minus the first 30 workers). So under the ACA, businesses that currently don’t provide coverage must pay either the cost of offering new insurance or cough up a fine to Uncle Sam. That’s bad news to many employers, especially those continuing to struggle to bounce back from the recession.
Employers kick in nearly $5,000 a year on average toward premiums for each worker with single coverage, according to the Kaiser Family Foundation. So for many businesses, the penalty, or cutting hours, are cheaper options.
The mandate kicks in this year for large employers, those with more than 100 full-time workers, and in 2016 for those with 50 to 99 employees.
Employers aren’t happy about that. Critics argue the requirement encourages employers to avoid adding new employees to stay below the 50-worker threshold, in the mandate-free zone. And some businesses are cutting back employees’ hours to avoid having to offer them insurance. Trim a worker’s hours from 30 to 29 a week, suddenly the ACA no longer considers them full time, and the requirement to offer them expensive insurance goes poof, the reasoning goes. Upping the threshold to 40 hours a week would protect part-time workers, Collins said Wednesday at the Washington, D.C., news conference.
“Our goal is simple,” she said. “We want to protect part-time workers from having their hours reduced and their paychecks cut because of the definition in this law.”
While some employers are taking that step, they’re the exception, according to the left-leaning Center on Budget and Policy Priorities. Obamacare isn’t causing a shift toward part-time work, labor data show, but the reintroduced legislation could, contradictorily, make that more likely.
Even some conservatives oppose the 40-hour bill. The 40-hour definition could actually prove more harmful to workers, many health policy experts argue. Yuval Levin, a conservative political activist and academic, wrote in November in the National Review that the legislation “seems likely to be worse than doing nothing.”
Because many more Americans work 40-plus hours a week than work just over 30, according to Bureau of Labor statistics. Just over 7 percent of the workforce puts in 30-34 hours a week, while nearly 44 percent works 40 hours a week. So those employers looking to save money could potentially trim the hours of many more workers under the new legislation. That could certainly boost employers’ bottom lines, but worsen the outlook for the working man and woman, the opposite of what supporters of the legislation say they want.
Just repeal the employer mandate rather than mess with it this way, Levin argued. The 30-hour threshold was established in part for this very reason, to limit businesses from trimming hours “by putting the cut-off well below the number of hours that most workers put in — employers are less likely to reduce a worker’s load by 10 hours than by just 1 or 2 to avoid the mandate.”
This won’t affect most businesses. Nationally, about 96 percent of all employers are small businesses with fewer than 50 workers, according to the U.S. Treasury Department, and they’re exempt from the mandate to provide insurance.
As for larger businesses, more than 95 percent already offer health insurance voluntarily, the Kaiser reports. In Maine, it’s even higher, nearly 98 percent. Those companies — which choose to offer insurance to attract good employees, among other reasons — won’t suddenly drop benefits or reduce hours from 40 to 39 a week to get around the legislation, a “completely bogus argument” made by the White House, Collins said.
Still, organizations that rely heavily on part-time staff will be devastated if the 30-hour threshold survives, including public schools, restaurants and nonprofit hospitals and home health care organizations, Collins said, flanked by representatives from Eastern Maine Healthcare Systems and the National Restaurant Association.
“We simply do not have the revenue to provide our workers with benefits and insurance,” Lisa Harvey McPherson of EMHS said, warning that home health agencies will be forced to cut workers, increase waitlists and potentially close down, shunting patients to nursing facilities.
People without insurance cost all of us. If workers who have insurance through their jobs lose those benefits, more will turn to government coverage or the marketplaces created under the ACA. Many will qualify for federal subsidies funded by taxpayers, which will increase the deficit, while others will go without coverage.
The nonpartisan Congressional Budget Office calculates that changing the ACA’s definition of full-time work to 40 hours a week would cost $45.7 billion over 10 years. That price tag includes paying out the subsidies, footing the bill for more people enrolling in Medicaid, and less revenue from the employer mandate penalties, because fewer companies would have to fork over the fine.