THE DOCTOR CAN’T SEE YOU NOW! In recent months, the top priority for state officials and insurers has been affordable premiums. A smaller panel of doctors and hospitals generally yields lower rates because insurers can negotiate better discounts. Insurers in California’s new health insurance exchange are holding down premiums by limiting choices, raising concerns that patients will struggle to get care.
- Major insurers have limited the number of doctors and hospitals available in California’s new health insurance market. Cedars-Sinai Medical Center, for example, is available only on two lower-priced Health Net plans in the state-run market. To hold down premiums, major insurers in California have sharply limited the number of doctors and hospitals available to patients in the state’s new health insurance market opening Oct. 1.
- New data reveal the extent of those cuts in California, a crucial test bed for the federal healthcare law. These diminished medical networks are fueling growing concerns that many patients will still struggle to get care despite the nation’s biggest healthcare expansion in half a century. Consumers could see long wait times, a scarcity of specialists and loss of a longtime doctor. “These narrow networks won’t work because they cut off access for patients,” said Dr. Richard Baker, executive director of the Urban Health Institute at Charles Drew University of Medicine and Science in Los Angeles.
- To see the challenges awaiting some consumers, consider Woodland Hills-based insurer Health Net Inc. Across Southern California the company has the lowest rates, with monthly premiums as much as $100 cheaper than the closest competitor in some cases. That will make it a popular choice among some of the 1.4 million Californians expected to purchase coverage in the state exchange next year.
- But Health Net also has the fewest doctors, less than half what some other companies are offering in Southern California, according to a Times analysis of insurance data. In Los Angeles County, for instance, Health Net customers in the state exchange would be limited to 2,316 primary-care doctors and specialists. That’s less than a third of the doctors Health Net offers to workers on employer plans. In San Diego, there are only 204 primary-care doctors to serve Health Net patients.
- Health Net says price will probably matter most to the uninsured and people who buy their own health insurance now, so it built a narrow network to serve those “value seekers.” “We have more than enough doctors for our projected enrollment through 2014, and we have time to adjust if it becomes necessary,” Health Net spokesman Brad Kieffer said. “We continue reaching out to providers, and we are bringing more on board.”
- Other major insurers have pared their list of medical providers too, but not to Health Net’s degree. Statewide, Blue Shield of California says exchange customers will be restricted to about 50% of its regular physician network. In response, California officials have been pressing Health Net and other insurers to add more doctors since companies filed their initial rosters in May. The state exchange, Covered California, says it will monitor enrollment closely once it begins next month and it’s prepared to step in if problems arise.
- Rather than mere head count, officials say they are scrutinizing what capacity physicians have to accept new patients. And to assist consumers, California will enable people to search for specific doctors online during enrollment to determine what, if any, health plans they will be part of in Covered California. “Does the doctor have room for one more patient or 40 patients? It’s about available seats,” Lee said. “We want to make sure every network has enough doctors.”
- In recent months, the top priority for state officials and insurers has been affordable premiums. A smaller panel of doctors and hospitals generally yields lower rates because insurers can negotiate better discounts with providers who receive more patients.
- Insurers and some consumer advocates think people are willing to trade some choice in order to pay less. More employers have been adopting these narrower networks in recent years to trim their own healthcare bills. The California Medical Assn., which represents more than 37,000 doctors statewide, thinks the state is underestimating the difficulties ahead.
- The differences in network size are noticeable across Southern California. Health Net has 920 physicians in Orange County, compared with more than 2,500 for Blue Shield, according to company data. Health Net has fewer than 800 doctors in San Diego County, while nearly 3,000 physicians are available in an Anthem Blue Cross plan.
- In addition to doctors, some big-name hospitals may be left out. A spokesman for Cedars-Sinai Medical Center said the hospital has received many calls from patients who were worried about keeping their access to the hospital and its affiliated doctors in the new health plans next year. Cedars-Sinai is available only on two lower-priced Health Net plans in the state-run market, according to the hospital and insurer. Anthem Blue Cross says that it’s the only insurer that includes UCLA Medical Center and other UC facilities statewide.
- Newly released data show the pricing power of these tighter networks. In Los Angeles County, Health Net is consistently the lowest-cost option for a mid-level Silver plan across various age groups. A family of four in Norwalk earning $65,000 annually would pay $384 a month for a Health Net policy, after taking into account a federal subsidy based on their income. For a policy with identical benefits, Blue Shield was next at $477 a month and Kaiser was the most expensive at $602.
*Modified from a LATimes.com article
It’s not news at this point that the Affordable Care Act (ACA) is built around the perverse premise that younger, healthier people should spend more for their health insurance, to subsidize the cost of health insurance for older, sicker people.
- A new study by the Kaiser Family Foundation, released this week, brings into the light the full extent of this wealth redistribution from young and healthy to old and sick. In fact, when individuals choose less generous plans in “Bronze Tier” a 60 year old could pay 1/3 of what a 25 year old with the same income would pay!
- Much has been made about the three to one age band rating requirements for health insurance contained in the ACA. In English that means that an insurer cannot charge a sick 60 year old more than three times what they charge a healthy 25 year old. This can be seen clearly in the Kaiser study when one looks at the cost of a so-called “Silver plan” for a 60 year old, 40 year old and 25 year old who all have identical incomes at 250 percent of the poverty level.
- In Los Angeles, CA for example the 60 year old would pay $541 per month before subsidies for the second lowest cost silver plan (which serves as the benchmark for calculating the subsidy), the 40 year old would pay $255 before subsidies, and the 25 year old would pay $200 before subsidies. Because all three are at 250 percent of poverty their out of pocket monthly cost is capped at $193 per month. Each receives a subsidy sufficient to bring their monthly premium down to the $193 cap.
- Now that their subsidy is set, each individual can choose to stick with the silver plan, move up to a gold plan, or move down to a bronze plan. This is where the president’s war on the young becomes strikingly clear. Whether these three individuals buy a gold, silver or bronze plan, their monthly subsidies stay the same – in the Los Angeles example $341 for the 60 year old, $62 for the 40 year old, and $7 for the 25 year old. If all three choose to buy the same bronze plan, the 60 year old would pay $50 a month, the 40 year old would pay $125 a month, and the 25 year old would pay $140 a month
- What that means is that those whose health care costs are the highest pays $90 LESS per month, than the individuals whose health care costs are non-existent. Of the eighteen states Kaiser examined, the largest discrepancy was in Connecticut where a healthy 25 year old would pay $117 a month for the same insurance that a 60 year old could get for FREE. The smallest margin – excluding New York and Vermont which have full community rating in effect – was in Portland, OR where the healthy 25 year old would pay $14 more for the same bronze plan than the more expensive to insure 60 year old.
Modified from an AmericanActionForum.com article.
Unions are frustrated the Obama administration hasn’t responded to their calls for changes to ObamaCare. Labor has watched with growing annoyance as the White House has backed ObamaCare changes in response to concerns from business groups, religious organizations and even lawmakers and their staffs.
- They say they don’t understand why their concerns so far have fallen of deaf ears. “We are disappointed that the non-profit health plans offered by unions have not been given the same consideration as the Catholic Church, big business and Capitol Hill staffers,” Unite Here President D. Taylor told The Hill. It’s an issue that Obama may have to face when he speaks to the AFL-CIO convention a week after Labor Day. Most unions backed ObamaCare’s passage, but labor argues provisions in the law could cut employee hours, unfairly tax their plans and force workers off their union health plans into the law’s potentially more costly insurance exchanges.
- The key issue are union members who many up many of the roughly 20 million people who use non-profit multi-employer “Taft-Hartley” health plans. Unions want the administration to change ObamaCare so that those plans are treated as qualified health plans that can earn tax subsidies. Under the administration’s interpretation of the law, the multi-employer plans are not eligible for the subsidies.
- Without those subsidies, employers may have the incentive to drop the plans and force workers onto the insurance exchanges. “The Democrats have completely given the store away to the for-profit industry,” Taylor said. “Without any question, we have a scenario set up that ObamaCare has turned all the money over to the for-profit plans and the non-profit plans will fade away.”
- Unions also argue that the law creates an incentive for employers to cut back on work hours for employees. Under ObamaCare, companies have to provide healthcare coverage to workers who work 30 hours or more a week — which could lead some employers to cut back on employee hours to avoid the requirement. An AFL-CIO official said the labor federation supports a change to ObamaCare that extends the employer’s healthcare coverage requirement to workers working less than 30 hours per week.
- Unions’ lobbying to change the law has grown louder as open enrollment approaches for the exchanges. “With open enrollment set to begin on October 1, time is of the essence, so we are working hard every day to find a solution to protect our members’ healthcare,” said Tim Schlittner, a spokesman for the United Food and Commercial Workers International Union (UFCW). Schlittner estimates that about 500,000 members of the 1.3 million-strong UFCW use Taft-Hartley plans. “We continue to have a dialogue but we haven’t found a solution yet,” he acknowledged.
*Modified from a Hill.com article
False impressions surrounding the ACA have fueled myths about COBRA compliance. Employers need to continue complying with COBRA. Misperceptions stem from the misunderstanding that exchanges will eliminate the need for COBRA. Yes, the ACA requires that exchanges be operational in states by Oct. 1, 2013. But this will be another option, not a replacement, for qualifying individuals who otherwise lack health insurance and also qualify for COBRA.
Following are five attributable to confusion over exchanges, and an explanation of the reality
Myth No. 1: Exchanges will be consistent in each state.
- Reality: Each state may design its exchange differently, just as Massachusetts and Utah have. As noted, a majority of states have decided not to establish a state-run exchange. Additionally, different carriers may cause Federally-operated exchanges to run differently in each state.
Myth No. 2: Exchanges will be less expensive than employer-provided benefits.
- Reality: This will depend on the risk pool entering each exchange. If only the sickest enter, exchanges will be more costly. “It may all come down to cost,” says Geoffrey Mann, senior manager, product compliance, for Ceridian. “It’s not at all clear today that the same coverage will cost someone less through a marketplace than COBRA. And, even if the cost is comparable, there may be other reasons to hold onto employer coverage.”
Myth No. 3 Employees will prefer exchanges to other health insurance options.
- Reality: Several reasons might sway individuals to continue their current health insurance: Their provider networks may not be offered in exchanges. Dental and vision coverage may not be offered. Individuals may have already met deductible or out-of-pocket requirements. And, though the form to apply for exchange eligibility has been pared from 21 to four pages, applicants may find the process too confusing or complex and elect to remain on COBRA.
Myth No. 4: Exchanges will be a viable option for all employees in 2014.
- Reality: Until 2017, exchanges will only be available to individuals and to organizations with fewer than 50 employees (in Hawaii, 100). Additionally, delays may themselves render them inoperative or short of fully operational beyond 2014.
Myth No. 5: The Marketplace will completely address the continuation of health benefits.
- Reality: If this were the case, COBRA would have been repealed. Furthermore, the DOL recently made changes to its model COBRA Election Notice, suggesting the agency’s view that COBRA and exchanges will co-exist for the foreseeable future. Furthermore, the many practical considerations mentioned in the reality behind Myth No. 3, above, suggest COBRA’s perpetuity, too.
Changes to COBRA might come in 2017, when large employers may become eligible to participate in the Marketplace. Their workforces would expand the base of exchange-eligible individuals, and Congress might then consider revisiting provisions of COBRA. For now, however, employers must comply with all aspects of COBRA.
*Modified for an Employee Benefit Advisor.com article
Independent National Journal analysis finds premiums higher under Obamacare as employers weigh dropping coverage.
Republicans have long blamed President Obama’s signature health care initiative for increasing insurance costs, dubbing it the “Unaffordable Care Act.” Turns out, they might be right.
- For the vast majority of Americans, premium prices will be higher in the individual exchange than what they’re currently paying for employer-sponsored benefits, according to a National Journal analysis of new coverage and cost data. Adding even more out-of-pocket expenses to consumers’ monthly insurance bills is a swell in deductibles under the Affordable Care Act.
- Health law proponents have excused the rate hikes by saying the prices in the exchange won’t apply to the millions receiving coverage from their employers. But that’s only if employers continue to offer that coverage–something that’s looking increasingly uncertain. Already, UPS, for example, cited Obamacare as its reason for nixing spousal coverage. And while a Kaiser Family Foundation report found that 49 percent of the U.S. population now receives employer-sponsored coverage, more companies are debating whether they will continue to be in the business of providing such benefits at all.
- Caroline Pearson, vice president at Avalere Health, a health care and public policy advisory firm, said there’s a calculation low-wage companies will make to determine if there’s cost savings in sending employees to the exchanges. “The amount you have to gross up their wages so they can get their own insurance and the cost of the penalties may add up to less than the cost of providing care,” she said.
- It’s a choice companies are already making. The number of employers offering coverage has declined, from 66 percent in 2003 to 57 percent today, according to Kaiser’s study. The drop-off in employer coverage paralleled an increase in premiums, which rose 80 percent for families and 74 percent for singles in the last 10 years, the Kaiser study found.
- “To any small employer, it’s a no-brainer,” said Devon Herrick, a senior fellow at the National Center for Policy Analysis, a conservative policy research organization. “If workers can get better coverage that’s subsidized, it makes sense for the employer to stop providing health insurance.”
- The cost of Obamacare will vary by state. But early numbers from state exchanges–including California, Minnesota, Washington, and Rhode Island, in addition to those found on Kaiser’s online cost calculator–provide similar estimates, all of which indicate a wide disparity between workers’ contributions to premiums under employer plans as opposed to Obamacare.
Whether the quality of care in the new market is comparable to private offerings remains to be seen. But one thing is clear: The cost of care in the new market doesn’t stack up. A single wage earner must make less than $20,000 to see his or her current premiums drop or stay the same under Obamacare, an independent review by National Journal found. That’s equivalent to approximately 34 percent of all single workers in the U.S. seeing any benefit in the new system. For those seeking family-of-four coverage under the ACA, about 43 percent will see cost savings. Families must earn less than or equal to $62,300, or they, too, will be looking at a bigger bill.
Those numbers include the generous tax subsidies designed to make the new system more attractive to consumers. “In 16 states that HHS studied, premiums were on average almost 20% lower than what the Congressional Budget Office projected,” Premiums may be lower than predicted, but they’re not competitive with what workers are now paying for employer-sponsored care.
On average, a worker paid between $862 and $1,065 per year for single coverage in 2013, according to Kaiser’s numbers. For the average family plan, defined as a family of four, insurance cost between $4,226 and $5,284. Fewer than half of all families and only a third of single workers would qualify for enough Obamacare tax subsidies to pay within or below those averages next year.
Looking at single versus family-of-four coverage against the federal poverty line, low-income households benefit most from Obamacare and the tax subsidies that defray costs. Those eligible for tax subsidies can make up to 400 percent of the federal poverty line, equivalent to $45,960 for one person and $94,200 for a family of four. The data in the graphic is based on the Covered California calculator, which Senior Vice President Larry Levitt of Kaiser said is a market “roughly in the middle of the pack.”
- In places where the median family income is higher, the number of people who benefit from cost savings will be even lower. It’s a tough reality for California, which is home to the largest number of uninsured people in the country (6.7 million) and therefore viewed as the most important test for the success of the new federal health law.
The truth is, Obamacare is doing what it was intended to do: make health care affordable for the nation’s lowest earners by spreading out the costs among taxpayers. The trap is that the exchanges also present a savings for some employers but a rate hike for their employees. And shifting employees to the exchanges also is just logistically easier than trying to meet the law’s employer mandate.
As of August 2013, 50 percent of employers report being “somewhat prepared” to implement the provisions of the ACA, and an additional 22 percent report being “not prepared,” according to a Deloitte report to the National Conference of State Legislatures. The report also indicates that, overall, 81 percent of employers “do not anticipate dropping coverage.” Cheryl Smith, senior practitioner at Deloitte, said that number is likely to change as employers learn more about the exchanges.
“We’re not going to know who is coming into the exchanges for the next few years,” Smith said. “We also don’t know for whom the subsidies will be most enticing.” The Deloitte report found several factors that will feed into employer decisions about dropping coverage. Among them is an assessment of better benefits in an exchange, a penalty for not providing coverage that is less than the cost of that coverage, and a continued trend of premiums rising faster than inflation.
Employers are also likely to drop coverage if they have a great diversity in plan offerings in their market. The study found that 71 percent of small businesses would be more likely to join the exchange in that scenario, compared with 49 percent of large companies.
Modified from a NationalJournal.com article
Rate Shock: In California, Obamacare To Increase Individual Health Insurance Premiums By 64-146%. Progressives are becoming increasingly concerned at the prospect of millions of uninsured young people deciding to push the easy button next year by simply paying a very small fine rather than obtain health coverage.
- Consequently, they have turned to a new argument to get those under 30 to act against their self interest by signing up for the Exchanges. Now we are being told that Obamacare will be a good deal for young people in the long run since whatever short-term losses they incur in the form of higher premiums will be more than made up later when they are older and get to pay lower premiums than they would in today’s market.
- But those making these arguments haven’t offered any analysis to back up their claims. The conceptual point evidently is supposed to be intuitively obvious. Once the time value of money is taken into account, the average young person will be worse off under Obamacare even if they live long enough to be a near-elderly person who pays premiums that are well below actuarially fair rates.
- A recent study by the National Center for Public Policy Research shows that: About 3.7 million of those ages 18-34 will be at least $500 better off if they forgo insurance and pay the penalty. More than 3 million will be $1,000 better off if they go the same route.
- Consequently, many more will opt to pay the extremely modest tax rather than fork over many thousands of dollars to purchase coverage that became substantially more expensive for young people thanks to the misguided pricing rules imposed by Obamacare. The risk that the law will fail in an “adverse selection death spiral” thus has gotten much larger.
What’s so bad about modified community rating?
- Modified community rating essentially is an excise tax on people who buy health insurance. Those who choose to go bare avoid the tax entirely, but for those who do buy coverage, the tax is highly discriminatory, imposing the highest burdens on those who are young.
- Imagine a state that tried to impose a sales tax in this fashion, where everyone would have to show an ID card and the amount of tax charged to 18 year olds would be 18% while those age 30 would only have to pay 5% and seniors would get a rebate.
- People rationalize modified community rating on grounds that what goes around comes around. “Don’t worry kid. Someday you too will be old enough to enjoy premiums subsidized by youngsters your age. It all works out in the wash.”
*Modified from a Forbes.com article
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.
- 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
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
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.
- 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.
- 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.
- 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.