Congress Watch: Obamacare and the The Save American Workers Act

Joe Jansen has a decade and a half of experience working as a staff member on Capitol Hill.  He has worked in almost every legislative capacity in both the House and Senate. Congress Watch will be weekly feature for TPA.) The Patient Protection and Affordable Care Act, better known as “Obamacare,” has two rather significant mandates.  The first – the individual mandate – requires all Americans to have what the Federal government deems “adequate” health insurance.  The second – the employer mandate – requires “large employers” (those with more than 50 full-time employees) to offer a health benefits package deemed adequate by the Federal government to their full-time employees.  Under the law, failure to heed the mandates will lead to tax penalties.

We have recently witnessed the havoc caused by the individual mandate.  Despite the President’s pledge that “if you like your insurance you can keep it,” and Obamacare’s language “grandfathering” certain health plans, millions of Americans lost their insurance and were forced to the health care exchanges to purchase new policies.  While coverage of the individual mandate and the problems its implementation caused dominated, and continues to dominate, headlines, it is but a small sampling of what is to come.  The fact is that only around 25 million Americans obtain health care coverage on the individual market.

Some 160 million Americans have health insurance through their employers.  And, according to the administration’s own estimates, when the employer mandate is implemented more than half of these plans will be deemed inadequate, forcing employees and employers to lose health care coverage that they like.

If this were not enough, employer-sponsored plans are also threatened by a second problem resulting from Obamacare.  The law actually changes the definition of a full-time employee from one who works 40 hours per week, to one who works 30 hours per week.  Currently, “large” employers offer health benefits to 88% of their full-time employees and 15% of part-time workers.  Providing health care coverage costs money.  And, expanding coverage to include part-time workers is cost-prohibitive for many employers.  The new 30-hour rule is most likely to lead employers to do one or any combination of the following: change health care plans, drop coverage entirely, or decrease employee hours.

The administration recognized the problems of the employer mandate and acted to avoid an election-year disruption on a grand scale by delaying its implementation until after the 2014 elections.  For employers with fewer than 100 employees, new rules will not apply until after 2015.  But, despite the delays, the President’s pledge, and Obamacare’s language “grandfathering” certain health plans, millions eventually will lose health coverage they like due to the employer mandate.

Perhaps even more troubling, however, is that many will also lose jobs, hours, and income due to the mandate’s change to the 40-hour work week.  According to a recent U.S. Chamber of Commerce survey, half of small businesses plan to avoid the employer mandate by either cutting hours to decrease the number of full-time employees or replace full-time workers with part-time employees.  These changes are going to affect those who work in low-skill, low-wage jobs.  According to the Hoover Institution, the 30-hour rule puts 2.6 million workers with a median income under $30,000 at risk of losing jobs or hours.

This week, the House will consider legislation that will help alleviate some of the problems associated with the employer mandate.  The Save American Workers Act will simply change the definition of a full-time employee back to what we have known it to be for more than four decades – one who works 40 hours per week.  This is a modest change that will save a lot of heartache.