CBO Report: 1M May Lose Insurance Under Proposed Longer Work Week Definition
by Kate Rogers
February 25, 2014
Bad news for workers relying on their employer-sponsored health insurance—if Republicans get their way, you may be losing your coverage. That is, if the workweek gets restructured.
A Republican-backed bill seeks to restructure the definition of a full-time worker in the Affordable Care Act, bumping what would be considered a full-timer to 40 hours a week from the law’s current threshold of 30 hours. The change would be bad news for workers relying on employer-sponsored health insurance.
H.R. 2575, the “Save American Workers Act of 2013,” bumps up the full-time worker hour status from the Affordable Care Act’s 30-hour per week threshold to 40 hours per week. The bill was unanimously opposed by Democrats Ways and Means earlier this month, and will soon hit the House floor for a vote.
The nonpartisan Congressional Budget Office reported Tuesday that if passed, the bill would mean approximately 1 million workers would lose their private-employer-based coverage. An estimated 500,000 would shift to publicly-funded Medicaid or onto the public exchange marketplace coverage, and up to 500,000 would be left without insurance.
Under the ACA, every individual in the country has to have insurance by the end of open enrollment period on April 1, or they will face a fine of $95 or 1% of their annual income for failing to comply. The employer mandate, which requires every business with at least 50 or more full-time workers offer coverage, kicks in in 2015. The mandate has been delayed from its original 2014 start date.
The Obama Administration announced earlier this month that businesses with between 50 and 99 workers would not have to comply with the employer mandate until 2016.
Gary Burtless, labor economist at the Brookings Institution, says employers face competition to attract and retain talented workers, and that those who currently offer coverage to their workers would likely continue to do so even if the hourly requirements were to change.
“Those who offer will continue to offer, even with the higher threshold for who is considered full-time,” he says.
Critics of the ACA have said that the 30-hour requirement would lead employers to scale back the amount of hours offered to employees to skirt the penalty, but Burtless argues this could actually create more jobs, if people are needed to fill the gaps.
“More jobs could be available to people if you reduce their hours by a sizeable faction,” he says. “Then I would think you would need to hire other workers to make up for lost hours. No one has mentioned that.”
The bill is another attempt by the Republican party to weaken ObamaCare, says Pam Villarreal, labor expert at the National Center for Policy Analysis. “It’s not really addressing the need for reform of the ACA,” she says. “It’s taking employees that were designated as full-time up to 40 hours so that companies don’t have to pay as many penalties.”
Ways and Means Ranking Member Rep. Sander M. Levin, (D-MI), says the CBO estimate reveals the dangers of the Republicans’ continued efforts to repeal the ACA .“Republicans have just embraced a proposal to put wages and benefits at risk for a million or more hard-working Americans, while substantially increasing the deficit,” he said in a statement.
But Villarreal disagrees, adding that this could have a positive impact on wages, especially if fewer employers have to offer health benefits as a result.
“We look at how wages have remained stagnant,” she says. “But the cost of labor has gone up, and that is attributable to benefits. This keeps monetary wages stagnant, because companies will only pay so much per employee to work. Redefining the work week could actually raise wages.”