Obamacare Tightens Yoke on Small Business
On January 1 the employer mandate went into effect for businesses with 50-99 workers.
One of the worst of Obamacare’s ill-conceived provisions went quietly into effect on January 1. The employer mandate, previously inflicted only on businesses with 100 or more employees, will now be imposed on those with as few as 50. This mandate will prevent countless small employers from hiring workers they would otherwise have hired and incentivize many others to replace full-time employees with part-timers. It is such an obvious job killer that the Obama administration delayed enforcement until after the 2014 midterms, the liberal Urban Institute has called for its repeal, and it has even been obliquely criticized by Hillary Clinton.
The employer mandate requires all businesses with 50 or more full-time employees to provide health coverage to at least 95 percent of these employees as well as any dependents they may have under age 26 — or pay crippling fines. But not all small employers can afford to offer insurance. Those which lack the resources to do so will avoid the mandate by assuring that the number of full-time workers they employ remains below 50. And, because Obamacare has arbitrarily redefined “full-time” to mean 30 or more hours per week, the employer mandate effectively caps both the number of workers many businesses can hire and how many hours they will work.
One hardly needs to be a Nobel laureate in economics to see that this scheme will exacerbate unemployment and underemployment. This is why the Obama administration ignored the law, which required the mandate to go into effect for all employers on January 1, 2014. Hoping to avoid the wrath of the voters in that year’s midterms a group of congressional Democrats went to the White House and persuaded the President to delay its implementation. Thus, the enforcement date was pushed back to January of 2015. Six months later, he arbitrarily moved back the implementation date for employers with 50 to 99 workers until this year.
The President’s illegal revision of the health care law was not enough to save his craven congressional accomplices, but the resultant controversy did prompt the left-of-center Urban Institute to publish a report titled, “Why Not Just Eliminate the Employer Mandate?” The authors explain that the perverse incentives created by the mandate far outweigh any of its perceived benefits: “Our analyses as well as that of others find that eliminating the employer mandate will not reduce insurance coverage significantly.… Eliminating it will remove labor market distortions that have troubled employer groups and which would harm some workers.”
Which workers will incur the most harm? The authors of the report suggest that most of the pain will be felt by low income Americans. They point out that the “arbitrary thresholds” imposed by the employer mandate “will change the employment decisions of some firms.” In the vague vernacular of the think tank, this means a lot of companies will make sure they stay below the 50 employee mark. How will that cause the mandate to disproportionately harm low income workers? “Because the non-offering firms are much more likely to be firms dominated by low-wage workers, low-wage employees will bear the greatest brunt of the penalties imposed.”
Many of these firms will stay below the artificial threshold by making greater use of part-time employees, and this is what prompted Hillary Clinton to drop her hint about Obamacare’s “unfortunate incentives.” At a recent rally, she was asked about “discrimination” against part-time workers by employers pursuant to the Family and Medical Leave Act (FMLA). Clinton responded thus: “Well, that’s why they are going to part-time. That, and also, the Affordable Care Act.… A lot of employers believe if you don’t work 40 hours a week you don’t get benefits… you don’t get health care benefits… you’re not eligible for the family medical leave.”
Ironically, considering that the question came from an obvious audience plant, Mrs. Clinton got it wrong on the Family and Medical Leave Act. FMLA eligibility isn’t based on full time or part time status. And she also seems unaware that an employee can work fewer than 40 hours per week and still be considered full-time in the brave new world of Obamacare. But the most telling part of her answer was her use of the word “believe.” Playing off the questioner’s placement of the FMLA issue in the realm of “discrimination,” she implied that employers who are simply following federal law are in reality just crooks who want to deny benefits to their workers.
She was clearly waiting for that question and the opportunity to suggest that, as President, she would work to fix the “unfortunate incentives” created by Obamacare. However, considering that Hillarycare included an employer mandate, and that it was an integral part of the health care reform plan she offered the last time she ran for President, it’s extremely unlikely that she would follow the eminently sensible policy recommended by the authors of the Urban Institute report: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.”
Congress is about to send the President an Obamacare repeal bill which would eliminate the employer mandate. He will, of course, exercise his veto. This means that small business will not be released from this yoke for another year. That’s unfortunate for the economy and America’s workers. On the other hand, it will demonstrate to the voters that both Obamacare and its odious employer mandate are only one election away from the knacker’s yard.
The employer mandate requires all businesses with 50 or more full-time employees to provide health coverage to at least 95 percent of these employees as well as any dependents they may have under age 26 — or pay crippling fines. But not all small employers can afford to offer insurance. Those which lack the resources to do so will avoid the mandate by assuring that the number of full-time workers they employ remains below 50. And, because Obamacare has arbitrarily redefined “full-time” to mean 30 or more hours per week, the employer mandate effectively caps both the number of workers many businesses can hire and how many hours they will work.
One hardly needs to be a Nobel laureate in economics to see that this scheme will exacerbate unemployment and underemployment. This is why the Obama administration ignored the law, which required the mandate to go into effect for all employers on January 1, 2014. Hoping to avoid the wrath of the voters in that year’s midterms a group of congressional Democrats went to the White House and persuaded the President to delay its implementation. Thus, the enforcement date was pushed back to January of 2015. Six months later, he arbitrarily moved back the implementation date for employers with 50 to 99 workers until this year.
The President’s illegal revision of the health care law was not enough to save his craven congressional accomplices, but the resultant controversy did prompt the left-of-center Urban Institute to publish a report titled, “Why Not Just Eliminate the Employer Mandate?” The authors explain that the perverse incentives created by the mandate far outweigh any of its perceived benefits: “Our analyses as well as that of others find that eliminating the employer mandate will not reduce insurance coverage significantly.… Eliminating it will remove labor market distortions that have troubled employer groups and which would harm some workers.”
Which workers will incur the most harm? The authors of the report suggest that most of the pain will be felt by low income Americans. They point out that the “arbitrary thresholds” imposed by the employer mandate “will change the employment decisions of some firms.” In the vague vernacular of the think tank, this means a lot of companies will make sure they stay below the 50 employee mark. How will that cause the mandate to disproportionately harm low income workers? “Because the non-offering firms are much more likely to be firms dominated by low-wage workers, low-wage employees will bear the greatest brunt of the penalties imposed.”
Many of these firms will stay below the artificial threshold by making greater use of part-time employees, and this is what prompted Hillary Clinton to drop her hint about Obamacare’s “unfortunate incentives.” At a recent rally, she was asked about “discrimination” against part-time workers by employers pursuant to the Family and Medical Leave Act (FMLA). Clinton responded thus: “Well, that’s why they are going to part-time. That, and also, the Affordable Care Act.… A lot of employers believe if you don’t work 40 hours a week you don’t get benefits… you don’t get health care benefits… you’re not eligible for the family medical leave.”
Ironically, considering that the question came from an obvious audience plant, Mrs. Clinton got it wrong on the Family and Medical Leave Act. FMLA eligibility isn’t based on full time or part time status. And she also seems unaware that an employee can work fewer than 40 hours per week and still be considered full-time in the brave new world of Obamacare. But the most telling part of her answer was her use of the word “believe.” Playing off the questioner’s placement of the FMLA issue in the realm of “discrimination,” she implied that employers who are simply following federal law are in reality just crooks who want to deny benefits to their workers.
She was clearly waiting for that question and the opportunity to suggest that, as President, she would work to fix the “unfortunate incentives” created by Obamacare. However, considering that Hillarycare included an employer mandate, and that it was an integral part of the health care reform plan she offered the last time she ran for President, it’s extremely unlikely that she would follow the eminently sensible policy recommended by the authors of the Urban Institute report: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.”
Congress is about to send the President an Obamacare repeal bill which would eliminate the employer mandate. He will, of course, exercise his veto. This means that small business will not be released from this yoke for another year. That’s unfortunate for the economy and America’s workers. On the other hand, it will demonstrate to the voters that both Obamacare and its odious employer mandate are only one election away from the knacker’s yard.
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