Spending on health benefits in service occupations and among small firms exposed to ObamaCare mandates shrank over the past year, new Labor Department data show.
- Although employers face penalties in 2014 if they fail to offer affordable coverage, this decline in spending on health benefits shows that they’re finding ways to shift some of ObamaCare’s looming costs back to the government. Strikingly, Bureau of Labor Statistics data show that health benefit increases came to a standstill in service occupations after the first quarter of 2010 — when ObamaCare became law.
- Prior to that, benefit costs had grown steadily since the mid-1990s. But following ObamaCare’s passage, health benefits per hour of work in service occupations grew 0% through March 2011 and 0% the next year, before falling 0.7% through March 2013.
- Meanwhile, over the past three years, health benefits rose a moderate 2%, 2.8% and 2.7% per hour for the broad workforce, evidence that lower health care inflation doesn’t explain the unusual declines in some sectors. Rather, a likely culprit is a shift in the mix of full-time workers who will come under ObamaCare’s employer mandate and part-time workers who won’t.
- Employers who offer full-time workers coverage can escape a potential fine of $3,000 per worker if employees work fewer than 30 hours per week. That fine, levied for each full-time worker who accesses ObamaCare subsidies, equates to $5,000 in deductible wages for a profit-making firm with a 40% federal and state tax rate.
- BLS data, though volatile from month to month, clearly show that retailers have been cutting the average workweek for nonsupervisory employees over the past year. While most employers have yet to reveal how they plan to adjust their workforce and benefit policies, a number have provided anecdotal support for the data now coming in.
AAA Parking and Regal Entertainment Group, a national movie theater chain, are among employers confirming a shift to part-time work in response to ObamaCare. Reuters reported that Wal-Mart Stores this year has noticeably upped its hiring of temp workers. May’s employment report showed that the number of temp workers hit a record high, evidence that employers are embracing temps as a strategy for dodging ObamaCare fines.
The cost-shifting of ObamaCare’s expenses won’t only fall back on government, but on workers clocking fewer hours and, in other cases, on workers covering a bigger share of their health premiums. Among private employers with 50-99 workers, spending on health benefits per hour fell 0.5% from a year ago in March.
This is noteworthy because these companies are just above the 50-worker threshold above which ObamaCare’s mandate will apply. At private firms with up to 49 workers, health benefits rose 2.1% from a year ago.
In private-sector service jobs, workers received, on average, 90 cents in health benefits, $10.71 in wages and $14.19 in total compensation per hour. For perspective, ObamaCare’s $5,000 wage-equivalent fine comes out to $2.40 an hour for a 40-hour workweek. That’s nearly 4.5 times after-tax spending on health benefits.
*Modified from a Investors Business Daily article