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Will Obamacare hurt job creation and marriage?
Commentary: Families and employers pay the price
MarketWatch
Diana Furchtgott-Roth
9/27/2013
Excerpt:
At one time, getting a job was not that much of a problem. Neither was getting married. But the Affordable Care Act appears to create substantial disincentives both to hiring and marriage, potentially changing the fabric of American society in serious ways.
Let’s first look at hiring.
The Affordable Care Act is partly responsible for the slow jobs recovery. If employers with 50 or more employees do not offer the right kind of health insurance, and at least one employee gets subsidized coverage on the exchange, they are faced with penalties of $2,000 per employee per year. Since the first 30 workers are exempt from the penalty, moving from 49 to 50 workers can cost an employer $40,000 a year.
No wonder that many small businesses are opting to stay at 49 workers. If they decide to expand, they can use temporary workers or contract employees.
Bob Funk, president and founder of Express Employment Services, the fifth-largest employment agency in America, told The Wall Street Journal in an interview published last week, “Obamacare has been an absolute boon for my business…We’re up 8% this year. But it’s just terrible for the country.”
Funk continued, “Firms are just very reluctant to hire full-time workers. So they are taking on more temporary help, which is what we do.”
Companies can get around the penalty by hiring part-time workers, because they do not owe the $2,000 penalty on those who work fewer than 30 hours a week. Many companies such as SeaWorld SEAS -0.13% , Wal-Mart WMT -0.51% , and Lands’ End SHLD -2.88% , are substituting part-time for full-time workers.
As well as effects on hiring, the subsidies in the Affordable Care Act, could increase the incentive to divorce and discourage marriage.
Under the Act, if workers have affordable single-family coverage from an employer — coverage that by law workers are obligated to accept — their family members will not be eligible for premium subsidies on the exchanges. This can make the cost of insurance for some low- or middle-income families unaffordable. But if they divorce, they get the subsidy.
Without subsidies, low-income families will not be able to afford to buy insurance on the state exchanges. The Internal Revenue Service estimates that family plans will cost $20,000 (in after-tax dollars) a year by 2016. Anyone under 400% of the poverty line, currently $94,000 for a family of four, qualifies for a subsidy — unless a family member has employer-provided insurance.
In a 2011 National Bureau of Economic Research working paper , Cornell University professor Richard Burkhauser, Indiana University professor Kosali Simon, and Cornell PhD candidate Sean Lyons showed that in 2014, when the law will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state health care exchanges because one family member has employer-provided coverage for that person only.
Perversely, the only way for other family members to get subsidized coverage would be for the spouses to get divorced. Then the spouse without coverage and the children could get coverage on the exchange.
This provision of the Act also discourages marriage. Say that Jeff, who receives health insurance from his employer, wants to marry Jenny, who is buying her subsidized health insurance from the state exchange. If they married, Jenny would no longer qualify for subsidized coverage.
Furthermore, since premium subsidies are on a sliding scale, two married people getting their coverage on the exchange would pay more than if they were single.
...................................
View the complete article at:
http://www.marketwatch.com/story/wil...age-2013-09-27
Commentary: Families and employers pay the price
MarketWatch
Diana Furchtgott-Roth
9/27/2013
Excerpt:
At one time, getting a job was not that much of a problem. Neither was getting married. But the Affordable Care Act appears to create substantial disincentives both to hiring and marriage, potentially changing the fabric of American society in serious ways.
Let’s first look at hiring.
The Affordable Care Act is partly responsible for the slow jobs recovery. If employers with 50 or more employees do not offer the right kind of health insurance, and at least one employee gets subsidized coverage on the exchange, they are faced with penalties of $2,000 per employee per year. Since the first 30 workers are exempt from the penalty, moving from 49 to 50 workers can cost an employer $40,000 a year.
No wonder that many small businesses are opting to stay at 49 workers. If they decide to expand, they can use temporary workers or contract employees.
Bob Funk, president and founder of Express Employment Services, the fifth-largest employment agency in America, told The Wall Street Journal in an interview published last week, “Obamacare has been an absolute boon for my business…We’re up 8% this year. But it’s just terrible for the country.”
Funk continued, “Firms are just very reluctant to hire full-time workers. So they are taking on more temporary help, which is what we do.”
Companies can get around the penalty by hiring part-time workers, because they do not owe the $2,000 penalty on those who work fewer than 30 hours a week. Many companies such as SeaWorld SEAS -0.13% , Wal-Mart WMT -0.51% , and Lands’ End SHLD -2.88% , are substituting part-time for full-time workers.
As well as effects on hiring, the subsidies in the Affordable Care Act, could increase the incentive to divorce and discourage marriage.
Under the Act, if workers have affordable single-family coverage from an employer — coverage that by law workers are obligated to accept — their family members will not be eligible for premium subsidies on the exchanges. This can make the cost of insurance for some low- or middle-income families unaffordable. But if they divorce, they get the subsidy.
Without subsidies, low-income families will not be able to afford to buy insurance on the state exchanges. The Internal Revenue Service estimates that family plans will cost $20,000 (in after-tax dollars) a year by 2016. Anyone under 400% of the poverty line, currently $94,000 for a family of four, qualifies for a subsidy — unless a family member has employer-provided insurance.
In a 2011 National Bureau of Economic Research working paper , Cornell University professor Richard Burkhauser, Indiana University professor Kosali Simon, and Cornell PhD candidate Sean Lyons showed that in 2014, when the law will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state health care exchanges because one family member has employer-provided coverage for that person only.
Perversely, the only way for other family members to get subsidized coverage would be for the spouses to get divorced. Then the spouse without coverage and the children could get coverage on the exchange.
This provision of the Act also discourages marriage. Say that Jeff, who receives health insurance from his employer, wants to marry Jenny, who is buying her subsidized health insurance from the state exchange. If they married, Jenny would no longer qualify for subsidized coverage.
Furthermore, since premium subsidies are on a sliding scale, two married people getting their coverage on the exchange would pay more than if they were single.
...................................
View the complete article at:
http://www.marketwatch.com/story/wil...age-2013-09-27