Republicans to Chip at Obamacare by Redefining Work Hours

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DENNY'S BRUNCH

A waitress delivers a tray of food to customers at the Denny' s Corp. restaurant in New York, U.S., on Saturday, Sept. 6, 2014.

Photographer: Victor J. Blue/Bloomberg

Newly empowered Republicans say they can’t repeal Obamacare and plan to chip away at the law piece by piece, starting with redefining full-time work in a way that could affect health coverage for 1 million people.

House Speaker John Boehner and Senate Republican Leader Mitch McConnell yesterday said they want to rewrite the Affordable Care Act so employers could avoid providing health coverage to workers who put in less than 40 hours a week -- up from the law’s current 30-hour threshold.

The move is backed by business groups such as the National Retail Federation and the National Restaurant Association. The measure, which would face a presidential veto, would make it easier for employers to shift more workers to part-time status and avoid buying insurance or paying fines under a provision of the law taking effect at the end of the year.

The likely result: A million people would lose employer-paid health care and have to look for subsidized coverage on government insurance exchanges or go on Medicaid, according to the Congressional Budget Office. That’s just the opening round.

McConnell said after his party won control of the Senate in the Nov. 4 midterm election that Republicans wouldn’t able to repeal the health-care law as long as Barack Obama is president and would instead seek to limit its scope.

‘Piecemeal Attempts’

“Their strategy of choice will be piecemeal attempts to repeal parts of the statute, and it’s clear that the 40-hour rule may very well be part of that litany,” said Ron Pollack, executive director of Families USA, a Washington-based advocacy group that supports the health-care law.

The maneuver taps into public anxiety that the law would create incentives for employers to reduce workers’ hours to avoid paying fines or purchasing insurance. The Republican leaders borrowed language from the labor movement, characterizing the proposal as an effort “to restore the traditional 40-hour definition of full-time employment” in an op-ed article published yesterday in the Wall Street Journal.

McConnell, of Kentucky, and Boehner, of Ohio, are returning to a proposal that the Republican-led House passed in April, with the support of 18 Democrats. The White House threatened a veto and the Democratic-controlled Senate never took up the legislation.

Rejecting Proposal

White House senior adviser Dan Pfeiffer said Obama would reject the new effort to change the law.

“The proposal they offered before, it kicked a lot of people off of health care and cost a lot of money,” Pfeiffer told Bloomberg reporters and editors today in an interview. “It was bad policy and bad for the American people.”

Obama is “not going to accept anything that undermines the core elements of the health-care act, that takes health care away from 10 million people who have it,” he said.

The Affordable Care Act’s employer mandate requires companies with at least 100 employees to offer affordable insurance coverage next year to at least 70 percent of those who work 30 or more hours per week.

While raising that threshold “wouldn’t have a meaningful effect on the number of people who have insurance,” it would “essentially wipe out” the employer mandate, said Larry Levitt, a senior vice president of the Kaiser Family Foundation, a health-policy research group.

Cutting full-time employees to fewer than 30 hours a week to skirt the current law’s mandate would be disruptive to business operations, but it might be easier for a company to reduce hours to just below 40, Levitt said.

Foreseeing Move

The Congressional Budget Office foresaw just that kind of rejiggering of work hours when it prepared cost estimates on the House legislation earlier this year.

“Without changing the total number of hours worked by its employees, an employer might reassign hours worked so that there are more employees just below the 40-hour threshold than there would otherwise be,” according to the CBO report in February.

As a result, CBO estimated, between 500,000 and 1 million people would be moved into Medicaid or onto health exchanges, and half a million would wind up without insurance.

Congress’s Joint Committee on Taxation estimated a 40-hour-per week threshold would increase the federal budget deficit by $73.7 billion over 10 years.

“There is a substantial cost associated with this change,” said Nancy-Ann DeParle, a former White House adviser who worked on the law. “You have to ask yourself how we pay for it.”

‘New Incentive’

The conventional 40-hour-a-week definition of full-time work dates to the 1938 Fair Labor Standards Act, which regulates overtime pay. It’s not a universal standard. The Bureau of Labor Statistics defines full-time work as 35 hours a week.

While the number of Americans forced to accept part-time work has been falling as the economy improves, it remains far above historical standards. In October, private-sector workers put in an average 34.6 hours a week, the BLS reported today.

“There’s been a rash of part-timing in the economy for a generation now; it well preceded the ACA,” said Peter Colavito, director of government relations for the Service Employees International Union. “What we don’t want to do is create a new incentive for folks to go under 40 hours a week.”

Some employers, including many small businesses, say that’s exactly what the current law does.

Wal-Mart, Target

Last month, Wal-Mart Stores Inc. said it would stop offering health coverage to employees who work less than 30 hours a week, following similar moves by Target Corp., Home Depot Inc. and Walgreen Co. The move, which affects about 2 percent of the retailer’s 1.3 million employees, could save the company about $50 million in premiums this year.

The Republicans’ proposal could be the starting point for a compromise to address employer concerns, said Ed Pagano, the Obama White House’s former chief Senate lobbyist, now a partner at the law firm Akin Gump Strauss Hauer & Feld LLP. Still, it remains to be seen whether Republicans would negotiate or use the proposal simply as a political tool to criticize the law, Pagano said.

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