Obamacare’s 30-Hour Workweek Challenged by GOP

The Fiscal Times

Congressional Republicans will return to Capitol Hill next week with Obamacare in their crosshairs. 

They’ll take aim at a provision in the law that defines “full- time employees” as those working 30 hours or more. Under Obamacare’s employer mandate, companies with 50 or more “full-time” employees will be required to offer health insurance to their workers or pay a penalty if at least one of their employees purchases a plan through the healthcare marketplace with a federal subsidy.

In an Op-Ed published in the National Review Online, House Majority Leader Eric Cantor said the House will be focusing on changing the law’s definition of “full-time employees” to workers logging more than 40 hours a week or 174 hours a month for full-time equivalents.

Related: GOP Strategy on Obamacare: Repair or Repeal?

Republicans and business proponents of the legislation say the current provision incentivizes companies to shift their full-time workers to part-time status just below the 30 hours threshold in order to avoid paying for employee health insurance.

Ways and Means Committee Chairman Dave Camp (R-MI) and other Republicans have dubbed these workers the “Obamacare 29ers” in reference to the reduced hours they say employees would work because of the law.

"ObamaCare imposes large and disproportionate costs on employers and has created a new class of employees,” Camp said in a statement after the committee approved the measure last week. "Many of these people have either lost or risk losing their full-time status and are being held back through no fault of their own but instead by a misguided law."

Related: More Companies Dump Employee Insurance for Obamacare

However, some health policy experts say changing the full time status to 40 hour work weeks makes it easier for companies to circumvent the requirement that medium to large firms provide health coverage to their workers.

“The change would make it a lot easier for employers to get around the law,” said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. He explained the current threshold was put in place because it is more difficult for employers to reduce their full-time employee’s hours below 30 hours, than cutting hours short of the 40-hour threshold which would be closer to employees current work schedules.

Another potential problem with the change, as noted by University of Chicago economist Casey Mulligan in The New York Times is that it could further magnify “the already strong disincentives for working full time.” Mulligan explains that by taking a 39-hour position, the employee can have comprehensive health insurance coverage and actually make more money than he would in a full-time position, since premiums under Obamacare are likely cheaper than employer based plans, and many people qualify for a federal subsidy.

Linda Blumberg, a senior fellow at the Urban Institute’s Health Policy Center explained that increasing the definition of full-time employees to 40 hours would incentivize even more companies to shift their employees onto the health exchanges, which could potentially increase costs for the government, as more people would be utilizing federal subsidies. So far, 82 percent of Obamacare enrollees have qualified for financial assistance of some kind.

Related: Top 10 Questions Consumers Ask About Obamacare

The GOP’s main concern with the current provision is that it encourages companies to cut work hours. Critics repeatedly site an Employer survey from the International Foundation of Employee Benefit Plans, which found that nearly one in five small businesses said they were reducing hiring to try to stay under the 50-worker threshold that exempts companies from being required to offer full time employees health coverage. Another 16 percent said they planned to adjust hours so fewer workers would be eligible for health insurance.

Christine Pollack, vice president of government affairs at Retail Industry Leaders Association, the industry’s trade group, called the Republican’s bill a “move in the right direction”

“The Affordable Care Act’s 30 hour full-time definition is fundamentally reshaping labor markets and changing the way retailers plan, operate and manage,” Pollack said in a statement.

Sure enough, there have been many anecdotes reported about businesses shifting their employees’ hours to deal with the new law. For instance, a memo leaked last fall from Forever 21 revealed that the popular retailer planned to reduce a number of full-time staff to working 29.5 hours a week, just under the Obamacare threshold, Reuters reported.

Still, there is no compelling evidence to suggest that part-time employment has increased directly because of Obamacare, as the Congressional Budget Office noted in a recent report.

The CBO acknowledged that “there have been anecdotal reports of firms responding to the employer penalty by limiting workers’ hours and the share of workers in part-time jobs has declined relatively slowly since the end of the recent recession” however, the nonpartisan analysts said there is little evidence to directly blame the trend on Obamacare.

The CBO did forecast that the ACA will reduce the workforce, but not necessarily because employers are cutting jobs or hours. Instead, CBO said employees will likely choose to work less or not at all if they can get cheaper health coverage through the exchanges with financial assistance.

Although Obamacare’s critics have blamed the law for an increase in part-time work, some economists have pointed out that part-time employment was trending before Obamacare, and is likely the result of the Great Recession in 2008.

"There are ups and downs after the end of the recession... and the passage of health care reform... but the general drift is clearly down. Some point to the slight increase of the past six months, but there have been similar increases and decreases before and after the passage of health care reform," Max Sawicky wrote in a blog post for the Economic Policy Institute. There is nothing noteworthy about the most recent uptick."

The GOP’s bill is just the latest example of the Republicans new strategy to offer up “fixes” or alternatives to the law ahead of the 2014 midterm elections instead of sticking to their old ways of routinely and symbolically voting to repeal the law. Another bill introduced this week by Rep. Steve Scalise (R-LA) would delay the individual mandate until 2016.

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