March 23, just four days from now, will mark the sixth anniversary of when President Barack Obama signed the Patient Protection and Affordable Care Act into law. You may know this law better by its shorthand moniker, Obamacare.
Obamacare leaves its mark
Officially implemented on Jan. 1, 2014, Obamacare sought to completely alter the way we purchase health insurance and receive medical care.
- It offered a transparent and competitive health insurance marketplace that would allow the consumer to make side-by-side comparisons and educated purchasing decisions.
- It mandated that health-benefit providers could no longer turn away people with pre-existing conditions.
- It required health-benefit providers to spend at least 80% of collected premiums on care for its members.
- It offered federal financial aid to help expand Medicaid in as many states as would participate (31 ultimately chose to expand their Medicaid programs).
- It required individuals to purchase health insurance or face a penalty.
- It required businesses with 50 or more full-time equivalent workers to offer affordable health insurance to these employees, potentially even subsidizing some of their monthly premium payments.
Following Obamacare's third open enrollment period, some 12.7 million people had selected a plan, based on data from the Department of Health and Human Services. This is about one million higher than last year, although plan cancellations caused by insufficient documentation have been better accounted for in advance of calendar year 2016. This would imply that the 12.7 million figure may not drop all too much throughout the course of the year.
Obamacare's success or failure is often judged by its enrollment total, even though there are plenty of other factors that really should be weighed into whether or not Obamacare has done a good or bad job. One of these factors was a concern raised from the very start by skeptics of the law: namely, how Obamacare would affect employment.
Is Obamacare a job killer?
The argument went something like this:
The employer mandate, which originally was supposed to go into effect at the same time as the individual mandate but was pushed out into a staggered implementation between 2015 and 2016, requires employers to provide affordable health coverage options to their full-time equivalent employees (FTE), or employees who work an average of 30 or more hours per week. Businesses with less than 50 FTE are exempt. If an FTE in a business with 50 or more employees has to pay more than 9.66% of their modified adjusted gross income to cover their healthcare premium (9.66% is as of 2016; It was 9.56% in 2015 and 9.5% in 2014), the business is required to step in and provide a subsidy for that worker to help make their healthcare plan more affordable. Each incidence of non-compliance -- for either failing to provide qualifying health coverage options or failing to provide a subsidy -- could result in a $2,000 to $3,000 penalty against the business.
Skeptics believed that since part-time employees, or those working an average of 29 hours or less per week, were exempt from the scope of the employer mandate, businesses would simply respond by either laying off workers, or cutting full-time workers to part-time to avoid having to comply with the law.
Skeptics indeed had plenty of fuel for the fire. In 2013, Regal Entertainment Group, the nation's largest movie theater chain, cut thousands of its workers from full-time to part-time in order to avoid any penalties associated with Obamacare's employer mandate. In 2015, Andy Puzder, the CEO of CKE Restaurants, which is the parent of fast-food chains Carl's Jr. and Hardee's, noted in an op-ed column in The Wall Street Journal that Obamacare had pushed a number of workers in his company from full-time to part-time status.
This Obamacare concern has been completely debunked
Yet nearly six years after being signed into law, and more than a year post-implementation of the employer mandate for businesses with 100 or more FTEs, a recent analysis completely debunks the idea of Obamacare as a job killer.
According to a report released in the journal Health Affairs in January from three researchers, the Affordable Care Act has had little change on part-time employment as of 2015. Even in a handful of subgroups where a shift (which the authors noted was negligible) of about 0.5% was witnessed from full-time employment to part-time (workers with high school diplomas and pre-retirees aged 60 to 64), researchers were able to explain this shift as nothing more than subgroups that were responding to subsidies offered via the individual exchanges. Since subsidies are tied to the number of hours worked (among other things), these subgroups appear to have voluntarily chosen to reduce their hours in order to obtain a subsidy. In other words, this wasn't a corporate maneuver to push employees into part-time work but a move made by (a negligible number) of employees themselves.
Even though the argument can be made that an incentive exists for workers on the threshold of the 30-hour week mark to work less hours and receive a subsidy, researchers found little practical evidence that this was occurring. As noted in the publishing, "If this were true, one would expect to find increases in employment at the 'kink' just below the 30-hour threshold." But that isn't what these researchers saw.
The view of the papers' co-authors is also consistent with part-time employment data released by the White House's Council of Economic Advisors, as well as payroll firm ADP, which showed no discernible push toward part-time employment on the part of employers.
Kosali Simon, one of the co-authors of the report, suggested that there may not be many people near the 30-hour work-week threshold, and that's why we aren't seeing this shift into part-time employment. She also is open to the idea that it could take years for a potential shift to play out, although the data doesn't seem to concur with that hypothesis, at least not at this time.
In sum, researchers feel pretty confident suggesting that Obamacare is not a job killer after all.
One concern still unaddressed
Consider this a feather in the cap for Obamacare, but don't consider the health law out of the woods just yet.
Perhaps the most scathing criticism of Obamacare, which has still yet to be answered, is whether the law makes healthcare "affordable." Considering that around six out of seven enrollees qualify for a subsidy, it's a bit difficult to gauge affordability. However, polls from the Kaiser Family Foundation have consistently shown that plan pricing remains one of the biggest obstacles, if not the biggest, for the uninsured when it comes to trying to obtain health insurance.
The insurers themselves have also been critical of the affordability of the law. Citing the ease of consumers to change plans from one year to the next, as well as higher medical use rates, UnitedHealth Group, the nation's largest insurer and an operator in about half of all marketplace exchanges, suggested recently that it could lose nearly $1 billion combined between 2015 and 2016 from its Obamacare plans. We've also seen more than half of Obamacare's approved healthcare cooperatives close their doors because of hefty losses. In other words, when insurers try to be competitive with pricing, they're losing money at an unsustainable rate.
Thus, while Obamacare has enrolled a good number of previously uninsured individuals, and it's had no adverse effect on the jobs market, its future still remains very much clouded by uncertainty tied to its affordability.
Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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