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My turn: Employer mandate a recipe for unemployment

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From page A4 | January 09, 2013 | 14 Comments

Walmart just announced that it will not offer health insurance to new employees who work less than 30 hours a week. It’s reserved the right to do the same for existing workers.

For these new policies, Walmart’s employees can thank Obamacare.

The federal health reform law’s “employer mandate” requires companies with over 50 employees to provide insurance for anyone working 30 or more hours a week or face fines. That creates a strong incentive for companies to push their workers into a workweek fewer than 30 hours — and thereby avoid the additional costs Obamacare intends to saddle them with.

Walmart isn’t alone. The employer mandate will make it harder to for many businesses to operate efficiently, to hire new employees — or to ensure that existing employees can stay on full time.

Papa John’s CEO John Schnatter recently came under fire for stating that the employer mandate will take a bite out of his company’s pie. He said that his pizza chain’s franchisees would likely cut back employee hours — and that Obamacare would add up to 14 cents to the cost of each pizza.

The owner of several Denny’s franchises in Florida has contemplated slapping a 5-percent Obamacare surcharge on every meal, and a New York Applebee’s franchisee has said he may stop hiring because of the additional costs borne by the law.

Obamacare’s defenders suggest that these businessmen are just greedy. But it’s been widely known that the employer mandate would deliver a hefty blow to businesses since the president’s healthcare reform law was merely a bill.

In early 2010, the Congressional Budget Office (CBO) estimated that the employer mandate would force businesses to pay $52 billion in tax penalties from 2014 to 2019.

That money will have to come from somewhere — whether higher prices for consumers or reduced wages for workers.

Further, the CBO recently cautioned that the employer mandate would cause a 0.5-percent reduction of the American labor force. That may not sound like much — but it’s equivalent to eliminating about 700,000 American jobs.

These job cuts will hurt the working poor most. According to a paper by Harvard economist Katherine Baicker and University of Michigan economist Helen Levy, those who earn within three dollars of the minimum wage are at the greatest risk of losing their jobs thanks to an employer mandate. Baicker and Levy concluded that “1.4 percent of uninsured full-time workers would lose their jobs “under the mandate.”

In some cases, the employer mandate may backfire — and actually encourage businesses not to provide health insurance.

Businesses that do not furnish coverage must pay $2,000 per employee, excepting the first 30, if at least one of their workers receives subsidized coverage through the new insurance exchanges. Folks with incomes of up to four times the poverty level, or nearly $90,000, could qualify for subsidies.

So a firm with 50 employees could be looking at a fine of $40,000.

But health insurance is expensive — far costlier than the fine. Average premiums for single coverage were north of $5,600 in 2012 — and above $15,700 for family policies, according to the Kaiser Family Foundation.

Many employers may find it more economical to pay the fine and turn their workers loose in the exchanges.

Indeed, former CBO Director Douglas Holtz-Eakin estimates that as many as 35 million Americans out of about 160 million could lose their existing employer-provided insurance thanks to — ironically enough — the employer mandate.

Taxpayers will pay the price. Richard Burkhauser and Sean Lyons of Cornell and Kosali Simon of Indiana University estimate that the feds could have to spend an additional $48 billion a year if employers dump their workers into the exchanges.

For now, though, the employer mandate’s impact will largely be felt in the business community, at firms as big as Walmart and as small as the local diner. “I don’t know what secret [the politicians] know, where they just assume we can write them a check,” Sam Facchini, owner of Metro Pizza in Las Vegas, recently told a Nevada newspaper. “We can’t pay for this. Most of us operate on a thin margin and trying to stay in compliance [with the law] will make things much tighter.”

Sally C. Pipes is President, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. Her latest book is The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare (Regnery 2012).

LEAVE A COMMENT

Discussion | 14 comments

  • EvelynJanuary 09, 2013 - 6:29 am

    Good morning, America! Here seems as good a place as any to leave this tidbit. Apparently a Public Policy Polling (PPP) survey released yesterday reveals Congress is "less popular than carnies, root canals and colonoscopies, but more popular than the ebola virus, meth labs and gonorrhea." ********** http://tinyurl.com/az6xk2r

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  • Dink LaneJanuary 09, 2013 - 11:42 am

    In the words of THOMAS PAINE (Common Sense) Aristocratical & Monarchial TYRANNY is when they "are "independent" of the people; wherefore in a constitutional sense they CONTRIBUTE NOTHING towards the freedom of the state."....... Ah, but we forget about that.... This is a CORPORATE SOCIALIST country.... (Socialism for them.) Look at how they have YOU pay their taxes... Look at the County Tax rolls. NOT one dime of PROPERTY tax ..... Bet YOU pay property tax. ..... Now they whine about paying 1/2 of the health care...They used to help employees fill out the WELFARE forms (Us paying the bills again, so they buy Million $$ Homes and paintings.)

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  • EvelynJanuary 10, 2013 - 4:10 pm

    "Bill to criminalize Obamacare goes to South Carolina Statehouse Judiciary Committee" @ http://tinyurl.com/b77a4dv

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  • EvelynJanuary 14, 2013 - 6:56 am

    OBAMACARE'S HEALTH-INSURANCE STICKER SHOCK - Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher — a spread of about $5,500 per family. ... Mark Bertolini, CEO of Aetna, the country's third-largest health insurer, broke the silence on Dec. 12. "We're going to see some markets go up by as much as 100%," he told the company's annual investor conference in New York City. ********** http://online.wsj.com/article/SB10001424127887323936804578227890968100984.html

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  • DB SmithJanuary 14, 2013 - 7:18 am

    Indeed Evelyn, by this time next year employers will be facing a $2 to $40K penalty per worker if they don't bow to Obama. Already a 2.3% increase in medical devices such as teeth braces and pace makers. They anticipate a 50% increase in health care costs and Bama told us the costs would go now and not to worry.

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  • EvelynJanuary 30, 2013 - 4:25 pm

    Six months ago, much to the surprise (and dismay/despair) of many, the Supreme Court ruled Obamacare -- Patient Protection and Affordable Care Act (sic) -- constitutional. Some said Chief Justice Roberts appeared to have changed his vote at the last minute. Others have written the Minority Opinion read as though originally intended as the Majority Opinion. So what happened? Was Roberts Blackmailed To Support ObamaCare? - HERE

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  • James E.January 30, 2013 - 4:38 pm

    Evelyn, blackmail of the Chief Justice? Let's see, that would be stealing the coffee fund at the court or chasing the secretaries around his desk. Sex and/or theft -- the blackmail twins.

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  • EvelynJanuary 30, 2013 - 4:44 pm

    James: Read the linked document. In this case, neither sex nor theft.

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  • EvelynJanuary 30, 2013 - 7:00 pm

    James: On another page you responded: "Evelyn, I went to that site you noted and was enjoying the adoption story until the last couple of paragraphs which turned into an Obama and Obamacare rant. If adoption was the reason for him to flip, well, God works in strange ways and obviously God wants Obamacare." ********** Following, the paragraphs James references: "The circumstances of these two adoptions explain not only why this would be overlooked by an overall sympathetic media, but also why a sitting Chief Justice of the U.S. Supreme Court would not want this information to become public fodder well into his tenure. Its release and public discussion would discredit Roberts as an impartial judge of the law, and undoubtedly lead to his impeachment. This also explains why Roberts would have a means to be blackmailed, and why that leverage would still exist even after the institution of ObamaCare. ... And it has led to flipping the swing-vote on ObamaCare, which fundamentally changed the relationship between citizen and government, making us de facto property of the state, with our relative worth in care and maintenance able to be determined by the government. Essentially it was a coup without firing a shot, much less needing even an Amendment to the Constitution. And it is consistent with Obama's Chicago-style politics, that has previously involved opening other sealed records in order to win election."

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  • James E.January 30, 2013 - 8:07 pm

    Evelyn, last two sentences. Necessary? Or an Obama/Obama rant - Chicago style politics and opening other sealed papers to win an election? You did see the illustration at the bottom of the page you cited. Look, if the Chief Justice has commented a crime contact the FBI, otherwise it's boring to read about Chicago style politics and winning elections by opening sealed papers. Obama won.

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  • James E.January 30, 2013 - 8:10 pm

    *** committed

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  • EvelynJanuary 30, 2013 - 8:40 pm

    James: Illustration? No, I had not noticed it. Only read the article. But have now checked. Do you mean the ("We the People") Eagle x 2 or the ("God Bless our Troops") Gun? As for your "if the Chief Justice has commented a crime contact the FBI" . . . you really DO have a sense of humor!

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  • EvelynFebruary 01, 2013 - 4:18 am

    IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family - HERE

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  • EvelynFebruary 05, 2013 - 8:00 am

    "Lightest Retail Work Week In 3 Years: Thanks To Obamacare": I’m trying to figure out what genius decided that giving companies an incentive to shed full-time employees was a good idea for 2014. - HERE - ("Yes, but..................")

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