Tag Archives: Obamacare

News

How the new Obamacare mandates are reducing full-time employment

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From the Wall Street Journal.

Excerpt:

Here’s a trend you’ll be reading more about: part-time “job sharing,” not only within firms but across different businesses.

It’s already happening across the country at fast-food restaurants, as employers try to avoid being punished by the Affordable Care Act. In some cases we’ve heard about, a local McDonalds has hired employees to operate the cash register or flip burgers for 20 hours a week and then the workers head to the nearby Burger King or Wendy’s to log another 20 hours. Other employees take the opposite shifts.

Welcome to the strange new world of small-business hiring under ObamaCare. The law requires firms with 50 or more “full-time equivalent workers” to offer health plans to employees who work more than 30 hours a week. (The law says “equivalent” because two 15 hour a week workers equal one full-time worker.) Employers that pass the 50-employee threshold and don’t offer insurance face a $2,000 penalty for each uncovered worker beyond 30 employees. So by hiring the 50th worker, the firm pays a penalty on the previous 20 as well.

These employment cliffs are especially perverse economic incentives. Thousands of employers will face a $40,000 penalty if they dare expand and hire a 50th worker. The law is effectively a $2,000 tax on each additional hire after that, so to move to 60 workers costs $60,000.

A 2011 Hudson Institute study estimates that this insurance mandate will cost the franchise industry $6.4 billion and put 3.2 million jobs “at risk.” The insurance mandate is so onerous for small firms that Stephen Caldeira, president of the International Franchise Association, predicts that “Many stores will have to cut worker hours out of necessity. It could be the difference between staying in business or going out of business.” The franchise association says the average fast-food restaurant has profits of only about $50,000 to $100,000 and a margin of about 3.5%.

Because other federal employment regulations also kick in when a firm crosses the 50 worker threshold, employers are starting to cap payrolls at 49 full-time workers. These firms have come to be known as “49ers.” Businesses that hire young and lower-skilled workers are also starting to put a ceiling on the work week of below 30 hours. These firms are the new “29ers.” Part-time workers don’t have to be offered insurance under ObamaCare.

[…]A 2012 survey of employers by the Mercer consulting firm found that 67% of retail and wholesale firms that don’t offer insurance coverage today “are more inclined to change their workforce strategy so that fewer employees meet that [30 hour a week] threshold.”

The biggest problem I have with these socialist policies like Obamacare is that they often affect people who didn’t vote for Obama. It wouldn’t bother me at all if only Democrats were harmed by Democrat policies. But I don’t like it when innocent people who didn’t want these policies have to suffer the consequences of Democrat policies. Maybe we just need to be better at explaining things to Democrats using very simple words before the next election, so that they can vote for competence and results instead of voting for charisma and rhetoric.

News

How does Obamacare cause medical premiums to rise?

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The facts are not in dispute – Obamacare will make health insurance premiums go up.

The Wall Street Journal explains what will happen to medical insurance premiums as more of Obamacare is implemented in 2014.

Excerpt:

Central to ObamaCare are requirements that health insurers (1) accept everyone who applies (guaranteed issue), (2) cannot charge more based on serious medical conditions (modified community rating), and (3) include numerous coverage mandates that force insurance to pay for many often uncovered medical conditions.

[…]We compared the average premiums in states that already have ObamaCare-like provisions in their laws and found that consumers in New Jersey, New York and Vermont already pay well over twice what citizens in many other states pay. Consumers in Maine and Massachusetts aren’t far behind. Those states will likely see a small increase.

By contrast, Arizona, Arkansas, Georgia, Idaho, Iowa, Kentucky, Missouri, Ohio, Oklahoma, Tennessee, Utah, Wyoming and Virginia will likely see the largest increases—somewhere between 65% and 100%. Another 18 states, including Texas and Michigan, could see their rates rise between 35% and 65%.

While ObamaCare won’t take full effect until 2014, health-insurance premiums in the individual market are already rising, and not just because of routine increases in medical costs. Insurers are adjusting premiums now in anticipation of the guaranteed-issue and community-rating mandates starting next year. There are newly imposed mandates, such as the coverage for children up to age 26, and what qualifies as coverage is much more comprehensive and expensive. Consolidation in the hospital system has been accelerated by ObamaCare and its push for Accountable Care Organizations. This means insurers must negotiate in a less competitive hospital market.

Although President Obama repeatedly claimed that health-insurance premiums for a family would be $2,500 lower by the end of his first term, they are actually about $3,000 higher—a spread of about $5,500 per family.

But why? How does it happen?

Investors Business Daily has a look at the chain of causation.

Excerpt:

For years, ObamaCare critics focused on its least popular feature — the mandate that everyone buy insurance — taking their fight all the way to the Supreme Court.

But as ObamaCare’s official launch date approaches, even its backers are beginning to admit that the law could actually create powerful incentives for millions of people and thousands of businesses to drop their coverage, despite the mandate.

There is growing concern, for example, that the law’s market reforms will cause a huge “rate shock,” particularly for those young and healthy.

A February survey of major health insurance companies in five cities across the country found that they expect premiums for this group to climb an average 169%.

The cause of this rate shock is simple: ObamaCare imposes what is called “community rating” on insurance companies, effectively forcing them to charge the young and healthy more so they can charge older and sicker consumers less.

The five-city survey, for example, found that while the law will jack up rates for the young, it will lower them an average 22% for older and sicker customers.

At the same time, ObamaCare also forbids insurance companies from turning anyone down — a reform called “guaranteed issue” — which also will provide an incentive for some to drop coverage, knowing they can get it back any time.

“Even with the tax penalty … some healthy people would avoid purchasing coverage until they are sick,” Howard Shapiro, director of public policy at the Alliance of Community Health Plans, told regulators .

The problem is that if the young and healthy drop coverage, the result would be what the industry calls a “death spiral.” Premiums will climb as the pool of insured gets sicker, causing still more to cancel their policies.

This is just what happened in states that imposed strict community rating and guaranteed issue reforms in the past. In fact, of the eight states that did so, most ended up either dropping the reforms or loosening the rules after they saw enrollment decline and premiums climb.

It’s very important to understand that what Obama did with his health care plan will not cause premiums to go down. On the contrary, they have gone up and they will go up.

News

Unemployment rate rises: 169,000 more people not in labor force

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First, I hope everyone remembers about the William Lane Craig vs Alex Rosenberg debate tonight at Purdue University. There is live-streaming available, details here.

And now, three scary stories from CNS News.

First, this one about the recent depressing jobs report.

Excerpt:

The number of Americans not in the labor force grew by 169,000 in January, according to the Bureau of Labor Statistics’ latest jobs report.

BLS labels people who are unemployed and no longer looking for work as “not in the labor force,” including people who have retired on schedule, taken early retirement, or simply given up looking for work. There were 89 million of them last month.

[…]The nation’s unemployment rate increased a tenth of a point in January, rising to 7.9 percent from 7.8 percent, a level the Labor Department described as “essentially unchanged.”

Second, this one about Obamacare health care plans.

Excerpt:

In a final regulation issued Wednesday, the Internal Revenue Service (IRS) assumed that under Obamacare the cheapest health insurance plan available in 2016 for a family will cost $20,000 for the year.

Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan.

The examples point to families of four and families of five, both of which the IRS expects in its assumptions to pay a minimum of $20,000 per year for a bronze plan.

And finally, this one about Obamacare’s effect on job creators, aka “the rich” who need to “pay their fair share”.

Excerpt:

Sixty-one percent of U.S. small business owners said they were “worried about the potential cost of healthcare” and 56 percent said they were “worried about new government regulations,” according to the Wells Fargo/Gallup small business index released on Jan. 31, which also showed that 30 percent of small business owners are not hiring and fear going out of business within a year.

“At the bottom of the list, but still at a surprisingly high level, 30% of owners say they are not hiring because they are worried they may no longer be in business in 12 months,” according to Gallup’s index summary. “This is up from 24% who had the same worry in January 2012.”

[…]Gallup said the reasons given for less hiring, such as healthcare and government regulations, are “troublesome” and have negative implications for the U.S. economy.

Bad news! I remember the good old days of the Bush administration, when we had lower taxes, a 4.4% unemployment rate, and a $160 billion dollar budget deficit. Maybe watching tonight’s debate with WLC and this Duke University naturalist tonight will cheer me up.