Author Archive | John Barrett

Analysis: Obamacare, tepid U.S. growth fuel part-time hiring

U.S. businesses are hiring at a robust rate. The only problem is that three out of four of the nearly 1 million hires this year are part-time and many of the jobs are low-paid. Faltering economic growth at home and abroad and concern that President Barack Obama’s signature health care law will drive up business costs are behind the wariness about taking on full-time staff, executives at staffing and payroll firms say.

  • Employers say part-timers offer them flexibility. If the economy picks up, they can quickly offer full-time work. If orders dry up, they know costs are under control. It also helps them to curb costs they might face under the Affordable Care Act, also known as Obamacare.
  • This can all become a less-than-virtuous cycle as new employees, who are mainly in lower wage businesses such as retail and food services, do not have the disposable income to drive demand for goods and services. Executives at several staffing firms told Reuters that the law, which requires employers with 50 or more full-time workers to provide healthcare coverage or incur penalties, was a frequently cited factor in requests for part-time workers. A decision to delay the mandate until 2015 has not made much of a difference in hiring decisions, they added.
  • “Us and other people are hiring part-time because we don’t know what the costs are going to be to hire full-time,” said Steven Raz, founder of Cornerstone Search Group, a staffing firm in Parsippany, New Jersey. “We are being cautious.” Raz said his company started seeing a rise in part-time positions in late 2012 and the trend gathered steam early this year. He estimates his firm has seen an increase of between 10 percent and 15 percent compared with last year.

CAUTIOUS STRATEGY

  • The delay in the Obamacare employer mandate “confused people even further,” said Bill Peppler, managing partner at Kavaliro, a technology staffing firm in Orlando, Florida. “When we talk to customers, I still don’t think anyone has a handle on this.” Obamacare appears to be having the most impact on hiring decisions by small- and medium-sized businesses. Although small businesses account for a smaller share of the jobs in the economy, they are an important source of new employment.
  • Some businesses are holding their headcount below 50 and others are cutting back the work week to under 30 hours to avoid providing health insurance for employees, according to the staffing and payroll executives. Under Obamacare, any employee working 30 hours or more is considered full-time. An effort to trim hours might have helped push the average work week down to a six-month low in July. “As organizations and companies reduce the hours of part-time workers, they still have to replace the capacity, so they go out and hire additional part-time workers,” said Philip Noftsinger, president of CBIZ Payroll in Roanoke, Virginia, which manages payroll for more than 5,000 small businesses.

WEAK ECONOMY NOT HELPING

  • Obamacare is only one factor. The surge in part-time employment also reflects an economy that has struggled to maintain decent growth. That has left business owners such as Jason Holstine, who owns a building supply store in Baltimore, Maryland, reluctant to take on full-time staff. Holstine said he was more concerned about budget policy in Washington than about Obamacare, given that federal government furloughs tied to across-the-board spending cuts led some of his clients to put home renovations on hold. “We are still working in an environment that is very hard to forecast the near future and remains very cash-constrained,” said Holstine. “We were always nimble, but we had to become more reactive. Using part-timers gives us more flexibility.”
  • In a paper published last month, the San Francisco Federal Reserve Bank said uncertainty over fiscal and regulatory policy had left the U.S. unemployment rate 1.3 percentage points higher at the end of last year than it otherwise would have been. The jobless rate stood at 7.8 percent in December; it has since fallen to 7.4 percent.
  • “That’s about 2 million jobs below where we should have been in 2012 because of policy uncertainty,” said Keith Hall, a senior research fellow at George Mason University’s Mercatus Center in Arlington, Virginia. Economists and staffing companies are cautiously optimistic that part-time hiring and the low wages environment will fade away as the economy regains momentum, starting in the second half of this year and through 2014.
  • But businesses, accustomed to functioning with fewer workers, might not be in a hurry to change course. A study by financial analysis firm Sageworks found that profit per employee at privately held companies jumped to more than $18,000 in 2012 from about $14,000 in 2009. “Private employers are either able to make more money with fewer employees or have been able to make more money without hiring additional employees,” said Sageworks analyst Libby Bierman. “The lesson learned for businesses during the recession was to have lean operations.”

*Modified from a Reuters.com article

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Tacking Health Care Costs Onto California Farm Produce

Farm labor contractors across California, the nation’s biggest agricultural engine, are increasingly nervous about a provision of the Affordable Care Act that will require hundreds of thousands of field workers to be covered by health insurance. While the requirement was recently delayed until 2015, the contractors, who provide farmers with armies of field workers, say they are already preparing for the potential cost the law will add to their business, which typically operates on a slender profit margin.

  • “I’ve been to at least a dozen seminars on the Affordable Care Act since February,” said Chuck Herrin, owner of Sunrise Farm Labor, a contractor based here. “If you don’t take the right approach, you’re wiped out.” The effects of the law could be profound. Insurance brokers and health providers familiar with California’s $43.5 billion agricultural industry estimate that meeting the law’s minimum health plan requirement will cost about $1 per hour per employee worked in the field.
  • Farm labor contractors generally rely on a 2 percent profit, and they say they will have to pass the added health care costs required by the law on to growers. Mr. Herrin, who can employ up to 2,000 farmworkers — many of them longtime employees — has been warning his customers of the coming price increase due to health insurance costs. “It’s made for some heated battles,” Mr. Herrin said of his talks with growers, who include his father-in-law, the owner of a Central Valley farm.
  • Across the country, employers in many other kinds of businesses are devising strategies to comply with or, in some cases, sidestep a new requirement to provide insurance for those who work 30 hours or more. But in the vast, fertile fields of California’s Central Valley, part-time labor is not realistic. Pruning, picking and packing produce is full-time, nearly year-round work. “You can’t put your ag workers on a 28-hour workweek like Starbucks, Denny’s and Walmart are considering,” Mr. McClements said.
  • There seems to be widespread agreement among agricultural employers, insurance brokers and health plans in California that low-wage farmworkers cannot be asked to pay health insurance premiums. “He’s making $8 to $9 an hour, and you’re asking him to pay for something that’s he’s not going to use?” Mr. Herrin said. The minimum compliant health plan for employee coverage under the new law will cost about $250 a month in California’s growing regions, according to insurance brokers, and includes a $5,000 deductible for medical care, although insurers cannot charge co-payments for preventive visits. “It’s unacceptable,” Mr. Herrin said of the cost.
  • The situation is complicated by the reality that many farmworkers apply for jobs with questionable identification, and farmers and farm labor contractors hire them anyway. (Employers say they must accept documents that look legitimate and can be penalized for directly asking if a potential employee is in the country illegally.) Employers are trying to spread the word, a tricky process in places where the mention of government oversight can stir fear.
  • Oscar Renteria, owner of Renteria Vineyard Management, a farm labor contractor based in Napa, has held meetings in Spanish to explain the health law to his 380 employees, some of whom may be in the country illegally. “They’re really nervous,” Mr. Renteria said. “Nervous they’ll be tracked and then somehow the possibility of being identified, and the fear of being deported or not being allowed to work. It comes up all the time in conversations when we outline the choices.”

*Modified from a NYTimes.com article

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ObamaCare Fuels Sharp Workweek Drop In 4 Industries

Anyone who insists ObamaCare employer penalties aren’t having a meaningful impact on work hours simply hasn’t looked closely at the evidence. In  a private economy with 114 million workers clocking 34.4 hours a week on average, it’s easy to miss important changes. What feels like a wave to modest-wage workers getting hit may appear to be a mere ripple from an altitude of 40,000 feet.

  • It’s not hard to find industry groups with an unprecedented drop in work hours. Among retail bakeries, home-improvement stores and providers of social assistance to the elderly and disabled, the workweek for non-managers has fallen to record-low levels — by far. At general merchandise stores, department stores and discounters, the rate at which the workweek has fallen since early 2012 is way off the charts relative to prior data going back to 1990.

Historic Decline

  • This historic and simultaneous shift in hours worked across multiple industry groups has occurred just as a sizable incentive for reducing hours was set to take effect, and amid a multitude of reports that companies are altering their employment practices to dodge ObamaCare fines. The industries listed above are among the most logical to test for an ObamaCare effect because the average workweek has been above, or at least close to, 30 hours — the point at which ObamaCare makes employers liable for health coverage.
  • In assessing whether ObamaCare is hitting work hours, it’s also logical to look at industries that 1) feature modest-wage jobs requiring limited specialization; 2) have a high percentage of jobs at firms with at least 50 full-time-equivalent workers — the point at which ObamaCare’s mandate kicks in; and 3) don’t have a large share of workers who are undocumented, because they are ineligible for ObamaCare, giving employers no incentive to cut their hours.

Half-Time Baked

  • The average workweek at retail bakeries has plunged 7.7% since the start of last year, from 29.8 hours to 27.5 hours. Krispy Kreme Doughnuts said in September 2012 that 1,300 employees, about 35%, lacked employer coverage but could be entitled to it under ObamaCare.
  • The company said compliance costs would likely be below $5 million, before “any mitigating actions … to reduce the cost of the benefits … (or) the number of employees subject to the new requirements.” Of 500 employees Krispy Kreme added in the year ending Feb. 3, at least 80% were part-time — a clear shift for a firm whose store staffing was more than 60% full-time.

Permanent Temps

  • A Reuters survey in June found that 27 of 52 Wal-Mart stores contacted were hiring only temporary workers, who might not be around long enough to trigger employer penalties. Temps’ share of Wal-Mart’s workforce has surged from 1%-2% at the start of 2013 to “fewer than 10%.”
  • One might have expected the housing rebound to partly reverse, or at least stem, a slide in the workweek at retail home centers. Instead, after stabilizing in 2011, average weekly hours for non-managers have fallen another 4.7% since the start of 2012, from 32 hours to 30.5.

*Modified from an Investors.com article
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ObamaCare Dropping Full-Timers at Schools, Local Governments

Health reform is now causing job turmoil across the country in three key groups that the White House has depended on for support—local government, school workers and unions.

  • School districts in states like Pennsylvania, North Carolina, Utah, Nebraska, and Indiana are dropping to part-time status school workers such as teacher aides, administrators, secretaries, bus drivers, gym teachers, coaches and cafeteria workers. Cities or counties in states like California, Indiana, Kansas, Texas, Michigan and Iowa are dropping to part-time status government workers such as librarians, secretaries, administrators, parks and recreation officials and public works officials.
  • This growing trend comes as three major unions have written to Democratic Congressional leaders Nancy Pelosi and Harry Reid warning that, because health reform is helping to push the work week to below 30 hours, it will “destroy the foundation of the 40-hour work week that is the backbone of the American middle class.”
  • Nearly three-quarters of government employers provide generous benefits to workers, funded by taxpayers, higher than any other industry, says the Kaiser Family Foundation.
  • But the quarter that do not are making rapid changes to the work week. To stop the wheels from coming off the school bus, school districts are doing the math, and are figuring out that cutting worker hours down to part-time status, or paying the mandate tax, or dropping part-time coverage is less expensive than offering health insurance benefits.
  • Cities across the nation are discovering that the extra expense from health reform will trigger layoffs and cutbacks in city services like public works, city jails, government workers in nursing homes, parks and libraries if they don’t push government workers down to part-time status (see below). Some plan to hire even more part-time employees to make up for the lost hours, city officials have said.
  • The irony is, health reform could fix the soaring pension and retiree health benefits owed by government agencies across the country, as numerous municipalities consider moving to a part-time workforce, analysis shows.

SCHOOL DISTRICTS

  • Schools throughout Indiana are cutting back the hours of teacher assistants, bus drivers, cafeteria workers and coaches to avoid having to offer them health insurance under the new federal employer mandate.
  • The Wake County Public School System in North Carolina is considering restricting its 3,300-plus substitutes to working less than 30 hours a week, effective July 1. The school district figured that, if just a third of these subs got employer health insurance, it would cost it about $5.2 million.
  • The Southern Lehigh School District in Pennsylvania voted to cut the hours of 51 part-time secretaries, custodians and cafeteria workers to avoid the health care mandate.
  • In Nebraska, public school districts have been contemplating cutting worker hours to avoid the extra expense of health reform. Attorney Karen Haase who represents roughly 150 school districts in the state, estimates thousands of non-teaching jobs, such as bus drivers, cafeteria cooks, teacher aides, janitors, and administrative workers, may see their hours cut, layoffs and hiring freezes.  
  • Between 1,000 and 1,200 of teacher aides, substitute teachers, administrators, cafeteria workers, bus drivers, and security officers and other workers in the Granite School District outside Salt Lake City, Utah, will see their part-time hours reduced due to the costs of health reform.
  • Already, colleges and universities have been cutting back hours of adjunct professors. Youngstown State University in eastern Ohio will limit the hours of non-union part-time employees like these professors to 29 hours a week or less to make sure that the university is not required to provide them with health insurance coverage under the new law.

MUNICIPAL WORKERS

  • Officials in Floyd County, Ind., recently announced plans to drop the hours of part-time government workers to below 30 hours a week from 34 because of health-reform mandates. Butler County outside Wichita, Kansas, now classifies part-time municipal workers as those who work fewer than 30 hours a week. 
  • Long Beach, Calif., is restricting most of its 1,600 part-time employees to on average fewer than 27 hours a week. City executives warn that without the move, their budget would soar $2 million due to higher health benefit costs. The city calculated that the federal penalty for dropping coverage completely for its 4,100 full-time employees would have been about $8 million, so instead, it’s opting to cut the hours.

UNION OPPOSITION

  • The trend in school and government workers getting hours cut comes as the number of unions opposed to health reform grows. The list includes: The United Food and Commercial Workers International Union; International Brotherhood of Teamsters; International Brotherhood of Electrical Workers; International Union of Operating Engineers; United Union of Roofers, Waterproofers and Allied Workers; Sheet Metal Workers International Association; UNITE HERE; and Laborers International Union of North America.
  • Union leaders James Hoffa of the International Brotherhood of Teamsters, Joseph Hansen of The United Food and Commercial Workers International Union and D. Taylor of UNITE-HERE recently sent a letter to Reid and Pelosi warning: “The law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly,” adding, “the law as it stands will hurt millions of Americans including the members of our respective unions.”

*Modified from a Fox Business.com article

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Reminder: Under Obamacare the IRS Taxes Drug Companies For Selling Life Saving Medication

In June 2012, Obamacare was officially declared a big, fat tax and now, the IRS is moving forward with plans to tax pretty much everything it can. Articles have been written extensively about the job and innovation killing medical device tax, but according to a GAO report, the IRS has the authority to tax drug companies for the number of life saving medications it sells. As a result, drug prices go up and costs are passed onto patients who need those medications.

Established annual fee on manufacturers and importers of branded prescription drugs.

  • The report notes this tax was established in 2011, which explains recent increases in the cost of medication. A new analysis from HealthPocket of early health insurance rate filings finds that consumers who choose the lower cost Bronze Plans and Silver Plans under the Affordable Care Act (aka “Obamacare”) will likely be paying more for prescription drugs than they do now. Compared to comparable existing individual and family plan copays and coinsurance costs, consumers with prescription drug coverage can expect to pay an average of 34 percent more out of pocket for these medications if trends continue.

“About 70 percent of Americans use prescription drugs, and they are going to need to pay very, very close attention to what plans offer to minimize out-of-pocket increases for medications,” said Kev Coleman, head of Research & Data at HealthPocket and author of the study. “When it comes to drug costs and changes in our newly reformed health care system, the fine print really matters.”

*Modified from a Townhall.com

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Look out below! Work more, get less in Obamacare ‘cliff’

Be careful you don’t fall off the Obamacare “cliff” when the boss asks you to put in some overtime. Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money.

  • “Working more can actually leave you worse off,” “It’s sort of an absurd scenario,” said Jonathan Wu, ValuePenguin.com’s co-founder. “It’s something for people to be aware of.”
  • In that scenario, an individual or family whose annual income surpasses maximums set by the federal government—if only by $1—will totally lose subsidies available to buy health insurance under the Affordable Care Act. The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, Wu said. And they then would have to work significantly more to make up for the lost subsidy.
  • “I think they’d be surprised to see how drastic it is,” said Wu. “I’d be kind of shocked to see if I make $100 less (in total income each year), I get all these benefits, but if I make $100 more, I get nothing.” “You basically don’t want to fall in that hole,” said Wu, adding that he believed contractors and others with more control over their incomes would be apt to adjust their hours worked to avoid the subsidy cliff.

Under the ACA, federal subsidies in the form of tax credits to buy insurance on new state health insurance exchanges will be available to millions of people who can start enrolling on those exchanges Oct. 1. The subsidies are available to people or families whose incomes total 400 percent above the federal poverty level or less, and are designed to cap their insurance premiums at 9.5 percent of their total income.

Doing the math

  • For a single person, that FPL income maximum is $45,960 per year. The maximums are adjusted upward for couples and families until maxing out at $94,200 for a family of four. Under a scenario that ValuePenguin.com identified, a couple in Ohio, both age 50, would be eligible for subsidies worth $3,452 to purchase a so-called silver insurance plan—a moderately priced level of benefits under the ACA’s scheme—that costs $9,346 annually if they made up to $62,040 per year.
  • But if they made just $1 more than that, they would lose the subsidy. Wu noted that the couple then would have to earn at least $65,492 to make up for the lost subsidy.

In New York, a family of three whose annual income totals $78,120, would pay $12,784 for the second-lower-priced silver plan on that state’s insurance exchange. After getting a $5,363 tax credit, the family’s net cost for the insurance would be $7,421. But if the family earned even slightly more than $78,120, they would have to pay the entire $12,784 for the insurance because they then wouldn’t qualify for the subsidy. To make up for that, the family’s annual income would have to reach $83,483, Wu said.

*Modified from a CNBC.com article

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Doctors are skeptical and confused about Obamacare, survey finds

A new survey shows that an overwhelming percentage of physicians don’t believe that their states’ new health insurance exchanges will meet the Oct. 1 deadline for those key Obamacare marketplaces to begin enrolling the uninsured. Just 11 percent of doctors believe those exchanges will be open for business that day.

  • But those doctors, by a wide margin, also said they are “not at all familiar” with how a number of important aspects of those exchanges and plans offered on them will work—aspects that will directly affect their bottom lines. More than 65 percent of them gave that answer to all but one of the questions asking their familiarity with plan benefits levels, contracted rates with insurers, patient coverage terms and the claims process.

Shane Jackson, president and COO of LocumTenens.com, which conducted the survey, said the results are potential red flags for not only the finances of those physicians’ offices, but also for their patients, who “rely on their doctor for a lot of information.” “They expect to a large degree that their doctors understand how this is all going to work,” said Jackson, whose company is a full-service physician staffing agency and online industry job board.

Noting that an important goal of the Affordable Care Act is enrolling the uninsured in insurance plans—which will theoretically put more money in doctors’ pockets—Jackson said, “As major stakeholders and advocates in this effort, physicians should be educated about how these changes will impact them, their patients and their prospective patients.” “Our survey shows that for the most part, they are in the dark,” Jackson said. “Doctors, they’re seeing patients and they don’t have time or motivation to get up to speed on this, but they’re going to have to because it’s going to impact them.”

Doubts about exchanges

Those doctors, on average, believe they will see a 13.4 percent increase in the number of patients coming to their practices after the state health exchanges go into effect. Those exchanges, a pillar of President Barack Obama’s healthcare reform law, are being set up to enroll uninsured people, many of whom will receive government subsidies to purchase insurance from companies that choose to sell plans through the marketplaces.

  • But more than 55 percent of the doctors don’t expect the exchanges to begin enrollment as scheduled this fall, and 34 percent don’t know if the enrollment will begin on time—a degree of skepticism that tracks overall cool or negative public opinion about Obamacare. Jackson said he was “amazed” that just 11 percent of doctors were “saying their exchanges would be ready.”

A huge number of doctors—89 percent—said they believed that consumers had not been adequately educated about how the exchanges’ policies will function, and more than 9 percent didn’t know if there had been adequate education of consumers. Just 1.6 percent believed consumers had been adequately educated about the exchange’s policies.

  • More than 56 percent of doctors said they were “not at all familiar” with how insurance policies purchased on the exchanges will affect their business, and another 21 percent were only “slightly familiar.”

That question was the only one in which the level of utter lack of familiarity among doctors about aspects of the exchanges was even close to 50 percent. The other questions showed significantly higher levels of ignorance. More than 67 percent were totally unaware of the coverage terms for patients, including cancellation and grace periods.

Nasty surprises

  • Jackson said that doctors who don’t have an understanding of those coverage terms could be in for a nasty surprise once the new plans go into effect.That’s because under the rules of the exchange, a patient can go up to three months without paying premiums and still not get their coverage formally dropped by an insurers—but the insurer isn’t obligated to pay claims incurred during the second and third month if that person isn’t paying their premiums for that time, Jackson said.
  • Those rules could mean that doctors end up eating the cost of the care they have already provided, or have their receivables stay unpaid for longer stretches of time. “Just from a business perspective for doctors and practices, that’s a huge thing they need to get their arms around,” Jackson said. His survey found just 5.2 percent of doctors were either “extremely familiar” or “very familiar” with patient coverage terms.
  • An even a greater number of doctors, 70.5 percent, don’t have any idea on how the claims process will work. And nearly 66 percent were completely unfamiliar with what the contracted rates with payers in the exchanges will be.

“I think it’s logical to say that they’re not necessarily seeking out all of the relevant information,” Jackson said of the large percentage of doctors unfamiliar with many aspects of the exchanges.

*Modified from a CNBC.com article

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WellPoint Sees Small-Business Plans Slip Ahead of Health Law

WellPoint Inc., the second-biggest U.S. health insurer, said more small employers are scaling back benefits this year, a potential hedge against higher costs expected under the U.S. health care law.

  • While small businesses have been cutting back for years, the pace has quickened in 2013, WellPoint Chief Financial Officer Wayne DeVeydt said in a phone interview. Fewer individuals are buying plans outside of work as well, possibly because they expect a better deal when the law’s insurance subsidies debut in January, he said.
  • “We continue to see the pace actually accelerating,” DeVeydt said in an interview after the Indianapolis-based company announced quarterly earnings. “Is it accelerating because people are willing to go naked, so to speak, before the beginning of the year? There’s really no way to say for sure.”
  • The number of American workers holding full-time positions fell in June as part-timers hit a record after rising for three straight months, according to the Bureau of Labor Statistics household data. Part-time employment has been outpacing full-time job growth since 2008. Economists cite tough economic conditions as the root cause, with some saying President Barack Obama’s 2010 health care law exacerbates the trend.

*Modified from an Insurance Networking News article

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WellPoint’s Anthem Blue Cross spurns Calif. small-business exchange

Health insurance giant Anthem Blue Cross said it won’t participate in California’s new insurance market for small businesses. Anthem, a unit of WellPoint Inc., is California’s largest insurer for small employers. This surprising move could hamper the state’s ability to enroll businesses in its new exchange called Covered California that opens Jan. 1 as part of the federal healthcare law.

  • Instead, Anthem said it will keep selling coverage to small firms outside the exchange in direct competition with the state-run market. Anthem also remains one of 13 health insurers that will offer policies to individuals in Covered California.

Nonetheless, Anthem’s decision stunned many observers.

  • “That’s really surprising and not a good thing for the exchange,” said Micah Weinberg, a senior policy advisor at the Bay Area Council, an employer-backed San Francisco group. “Anthem is a very major player in the small-group market and you want a broad range of insurers, particularly the most compelling brand names,” Weinberg said.

A spokesman for Covered California couldn’t immediately be reached for comment.

The state had required health insurers wanting to sell in the individual exchange to also submit a bid for the small-business market, which is limited to employers with 50 or fewer workers. Darrel Ng, a spokesman for Anthem, said Covered California lifted the requirement last month so the company opted to leave what’s known as the SHOP, or small-business health options program.

“Because Anthem is no longer required to participate in SHOP as a condition of being on the individual exchange,” Ng said, “Anthem has withdrawn its SHOP application. Anthem will continue to participate in the individual exchange.” Anthem also said it will remain part of a private exchange for small firms called California Choice.

  • Covered California is expected to announce the health insurers and their proposed rates for the small-business exchange in about two weeks. In the first few years, the state estimates up to 200,000 small-business workers and their dependents may get coverage through the state’s market.

Last month, California Insurance Commissioner Dave Jones asked the exchange to bar Anthem from its small-group market because of what he viewed as unreasonable rate hikes in recent months.

At the time, Covered California said it would consider the commissioner’s request alongside other factors. Some business groups opposed the exclusion, out of concern that Anthem’s absence would limit competition and employee choice.

The insurer said the recommendation by Jones had no bearing on its decision.

  • Anthem led California with 31% of the small-employer market in 2011, according to the most recent Citigroup data. Kaiser Permanente was a close second with a 28% share, followed by Blue Shield of California with 18% of small firms. Several major insurers have already spurned California ahead of the health law rollout. In May, UnitedHealth Group Inc., Aetna Inc. and Cigna Corp. opted not to participate in the state’s individual exchange.
  • Last month, both UnitedHealth and Aetna went a step further and announced they were leaving the state’s individual market entirely at year end, leaving nearly 60,000 customers to find new coverage.

*Modified from a LA Times.com article

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Union Fears ‘Destructive Consequences’ From Obamacare

The laborers union has added to organized labor’s drumbeat of dissatisfaction with the Affordable Care Act.

  • In a letter sent to President Barack  Obama on Thursday, Laborers International Union of North America President Terry O’Sullivan wrote that the law has “destructive consequences” for the types of health plans that cover millions of unionized construction workers and their family members.
  • The letter follows a separate one written last week by the heads of the International Brotherhood of Teamsters, the United Food and Commercial Workers and Unite Here, expressing similar concerns to Congress’s top Democrats, Sen. Harry Reid and Rep. Nancy Pelosi. The International Brotherhood of Electrical Workers took out print ads raising alarms about the law last week as well.
  • Mr. O’Sullivan zeroed in on some factors that could directly impact unionized construction workers who are typically covered by multiemployer plans. He noted that costs are rising for such plans because of the law’s benefit mandates. Moreover, a tax under the law would cost such health plans $63 per covered individual, or $630,000 for a plan covering 10,000 people, he wrote. The proceeds of the tax will be used to subsidize insurance companies offering health plans in the Health Exchanges.
  •  “In effect, ACA takes money from the pockets of each laborer covered by a health and welfare fund and gives it to for-profit insurance companies,” Mr. O’Sullivan wrote. Those added costs will eventually impact collective bargaining agreements, he said, making union construction companies less competitive than nonunion ones and resulting in less work for union laborers.
  • Mr. O’Sullivan concluded: “Approximately 3 million laborers, retirees, and their families now face the very real prospect of losing their health benefits. This, I must remind you, was something that you promised would not happen.”

The laborers union, with about 570,000 members, is one of a few major unions that didn’t support enactment of Affordable Care Act, Mr. O’Sullivan reminded Mr. Obama. “Now, we have watched as the implementation of the law has progressed, our fears have become reality,” he wrote.

*Modified from a WSJ.com article

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