Obamacare is a uniter, not a divider.
At least that’s the case with an important rule in the federal health insurance reform law that governs who can buy coverage through the workplace.
Both business owners and labor unions agree that the regulation could slash away at full-time employment and undermine consumers’ incomes. But they don’t agree on how to fix the issue. Several bills pending before Congress suggest very different approaches, and it’s not clear yet which — if any — of the proposals will win out.
To understand the bills, start with the rule that inspired them.
The Affordable Care Act says employees who work more than 30 hours a week qualify as full time, and employers have to offer them insurance or risk fines of $2,000 to $3,000 per worker. The regulation applies to any company with more than 50 full-time-equivalent workers.
Observers say the threshold is causing unintended consequences as employers drop workers below 30 hours to avoid the cost of coverage.
That could have big effects on the Las Vegas economy, with its high share of hourly service jobs in hospitality and restaurants, said Shaun O’Brien, assistant policy director for health and retirement for big labor group AFL-CIO. And with average weekly hours worked coming in at 33.7 in August, according to local research firm Applied Analysis, plenty of Las Vegans hover close enough to the threshold to cross it.
“Obamacare is supposed to be helping those who can’t afford insurance, but it’s actually hurting them by forcing their bosses to cut back on hours,” said Randi Thompson, state director of the National Federation of Independent Business.
Added Yvanna Cancela, political director of the hospitality union Culinary Local 226, “Unless fixes are made by the administration and Congress, hard-working Americans will be taking a giant step back rather than a big step forward when it comes to health care.”
No one tracks local changes in full- versus part-time employment, but Cancela pointed to U.S. Chamber of Commerce studies showing that 31 percent of franchised small and midsized businesses have already cut hours more than a year before the employer mandate takes effect on Jan. 1, 2015. Another 27 percent said they’ve replaced full-timers with part-timers. Among nonfranchised businesses, 12 percent have cut hours, and 12 percent have swapped out full-timers.
Metro Pizza hasn’t cut hours among the 240 employees at any of its six Las Vegas locations, and it doesn’t want to, co-founder Sam Facchini said.
“We’ve run a family like business for a third of a century in Las Vegas, and we understand that we cannot do it without our employees,” Facchini said. “First and foremost, it would be awfully hard to cut a full-time employee’s hours down under 30 a week without really devastating that person’s lifestyle. But you’re also changing the business model we’ve structured. We can’t provide that pizza-dining experience without great employees who are happy to be there and who believe in what we believe in.”
Still, 75 percent of Metro’s employees work fewer than 40 hours a week, and 90 percent work around that 30-hour mark. That means Metro’s owners, like legions of other businesses, could have decisions to make as the employer mandate looms in 2014, Facchini said. Forget about merely cutting hours; Metro may have to raise prices, too.
“It’s a matter of business survival in many cases, and our company would be no exception,” he said. “We would need to be very mindful of how we make the math work so that we could pay our bills week to week and month to month. It’s that way for almost any business. I think pushing that full-time threshold down to 30 hours actually destroys jobs, I really do.”
But on how to patch the problem, businesses and labor unions differ dramatically.
Bills that would change the law have been before the House of Representatives since early 2013. The Forty Hours is Full Time Act would set the workweek at, well, 40 hours. And the Save American Workers Act would repeal the 30-hour threshold and also replace it with a 40-hour standard.
Reps. Mark Amodei, R-Nev., and Joe Heck, R-Nev., are co-sponsoring the Save American Workers Act.
Government transparency group Civic Impulse doesn’t give either bill good odds. The group’s GovTrack website says the Forty Hours is Full Time Act has a 1 percent chance of passing the House, while Amodei’s and Heck’s bill has a 5 percent shot.
Those poor prospects are a good thing, union leaders say. They’re partial to a bill that would leave the 30-hour threshold in place and apply fines to a share of part-time workers. The Part-Time Worker Bill of Rights Act has no Nevada co-sponsors, and, according to GovTrack, no chance of enactment, either.
In a perfect world, O’Brien said, the full employer penalty would kick in at 20 hours, and companies would pay a prorated fine on employees who work fewer than 20 hours. That’s because if you move the penalty limit to 40 hours, companies would simply cut off employees at 39 hours a week.
“That threshold is really a cliff,” O’Brien said. “The basic problem is that if you create an hours cliff, you put people at risk of having their hours reduced by an employer in order to avoid any responsibility for coverage and risk of paying a penalty.”
But the AFL-CIO’s suggestion simply isn’t possible for most businesses, said Frank Nolimal, an employee benefits consultant with Las Vegas insurance brokerage Assurance Ltd.
“It’s not mathematically feasible for a company to employ people at union income levels and provide full benefits at 20 hours a week,” Nolimal said. “The cost of health care per employee would skyrocket because premiums aren’t going to change. Employers would just have to pay more.”
What’s more, most labor laws already recognize a 40-hour week, Facchini said. Overtime rules are based on it, and corporate paperwork revolves around it.
“We have a historical precedent to work with, and I see it as the logical threshold for any labor-related bill,” he said. “You’re going to have a real battle in Congress if we start looking at setting different levels of penalty. It sounds like the more explosive and onerous option. And it’s much more of a record-keeping challenge, because we have people who fall just above or below 20 hours. Where do you draw the line? How often does someone have to work 19 hours before you pay a lower penalty, or 21 hours before you have a different penalty?”
Either way, both sides said they’re confident lawmakers will eventually change the rule, one way or another. Lawmakers and President Barack Obama have already delayed the law’s small-business health insurance exchanges, put the employer-coverage mandate on hold for a year and repealed a 1099 tax-form mandate and a long-term insurance program, among more than two dozen other tweaks.
“All of the rollbacks in Obamacare so far are, to me, an indication that someone is at least willing to look at these things and say, ‘This isn’t working,’” Thompson said. “It seems like, every time something gets implemented and doesn’t work, they say, ‘OK, let’s fix that.’ ”