March 25, 2019
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Redefining full-time: How to give employers reason to cut more workers’ hours

Lawrence K. Ho | TNS
Lawrence K. Ho | TNS
Home Depot associate Vann James explains different products to customer Rick Hollis in the home appliances area of the Burbank, California, store in 2012. A recent bill proposes altering the Affordable Care Act, changing the definition of full-time worker from an employee who works 30 hours weekly on average to 40 hours.

Congressional Republicans have wasted no time making their opening arguments in the Obamacare debate since returning to Washington with control of both the House and Senate. The House has already passed three measures altering elements of the 2010 health care reform law.

Two have garnered unanimous House votes: One bill to exempt veterans who already have Department of Defense or VA health insurance coverage from figuring into headcounts that trigger the Affordable Care Act’s employer mandate and another to keep firefighters and EMTs from volunteer fire departments from counting as full-time employees who trigger the mandate. (The Treasury Department has already promised to exempt them through its regulations, making the House vote unnecessary.)

The most significant measure would alter the Affordable Care Act’s definition of a full-time worker for purposes of applying the employer mandate. Championed by Maine Sen. Susan Collins (and co-sponsored in the House by U.S. Rep. Bruce Poliquin from Maine’s 2nd District), it would change the definition of full-time worker from an employee who works 30 hours weekly on average to 40 hours.

It’s welcome news that Republicans have opened this session of Congress with attempts to tweak the law rather than immediately resume the push for outright repeal. Unfortunately, the tweaks they (and a number of Democrats) are considering steer the law — in piecemeal fashion — away from its intent of providing health insurance to more American workers.

Admittedly, the 30-hour definition of full-time work is causing some employers — including city governments, school districts and fast-food franchisees — to cut employees’ hours so fewer workers count as full-time and trigger insurance coverage requirements that apply to larger employers. There’s evidence of growth in the number of workers working between 25 and 29 hours — just the right number of hours to miss the Obamacare threshold. However, the impact has been small measured as a percentage of the 156.1 million-strong U.S. workforce.

The University of California-Berkeley Labor Center calculated that the 30-hour full-time definition puts about 2.3 million workers at risk of having their hours reduced. Those are workers in larger firms who put in 30-36 hours a week, don’t currently have employer-sponsored health coverage and earn wages below 400 percent of the federal poverty level — a threshold that makes them eligible for government-subsidized coverage through Obamacare’s online exchanges. Workers in the retail and restaurant industries account for 47 percent of those at risk for reduced hours.

Collins is right that changing Obamacare’s definition of full-time to 40 hours won’t act as a compelling incentive for large employers that already cover full-time employees to limit workers to 39 hours, thereby avoiding the employer mandate. But the redefinition would put at risk employees at large firms who work 40 or more hours a week, aren’t high earners, and don’t currently have employer-sponsored insurance.

The UC-Berkeley Labor Center estimates about 6.5 million workers fit that profile, almost three times more workers than the law currently puts at risk for reduced hours. At the 40-hour level, however, the affected employees work in different industries: The manufacturing, retail and general service sectors account for nearly half of the affected workers, rather than restaurants and retail.

In addition to putting more workers at risk for reduced hours, the Congressional Budget Office estimates the shift to 40 hours would grow budget deficits by $53.2 billion over the next decade — the result of fewer penalties assessed on employers and more people receiving health insurance subsidies and government-funded Medicaid. (The CBO estimates 1 million fewer people would receive employer-sponsored insurance as a result of the full-time redefinition; the majority would shift to insurance through state insurance exchanges or Medicaid.)

As Republicans — and Democrats — contemplate tweaks to Obamacare that maintain the law’s integrity, they would do better to consider changes that make the employer mandate simpler to administer, remove incentives to limit hours and prevent larger budget deficits.



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