Employers slash hours to avoid insurance mandate

U.S. health-care law tied to pay cut for part-timers

The Washington Post

For Kevin Pace, the president’s health care law could have meant better health insurance. Instead, it produced a pay cut.

Like many of his colleagues, the adjunct music professor at Northern Virginia Community College had a hefty course load, despite his official status as a part-time employee. But his employer, the state, slashed his hours this spring to avoid a Jan. 1 requirement that all full-time workers be offered health insurance. The law defines “full time” as 30 hours a week or more.

“We work so hard for so little pay,” he said. “You would think they would want to make an investment in society, pay the teachers back and give us health care.”

Earlier this month, the White House delayed the employer insurance requirement until January 2015. But the state of Virginia, like some other employers around the country that capped part-timers’ hours in anticipation of the initial deadline, has no plans to abandon its new 29-hour-a-week limit.

The impact on Pace and thousands of other workers in Virginia is an unintended consequence of the health law, which, as the most sweeping social program in decades, is beginning to reshape aspects of American life.

Under the law, companies with 50 or more workers will be required to provide health insurance to all their full-time employees, or face significant fines.

The decision to delay that requirement was welcomed by business groups, which said companies needed more time to adapt to the law. But the delay has emboldened the law’s critics, who say it is evidence the statute is ill-conceived and should be repealed.

A new Washington Post-ABC News poll finds that the country, which remains deeply divided about the law, is similarly split about the delay in the employer requirement. Fifty-one percent say they support the delay, while 45 percent say they do not. The public is also divided over whether the setback means the law is fatally flawed.

The poll, taken at a time of heightened criticism of the law, also finds support has weakened among Democrats since last year. Just under 6 in 10 Democrats say they support the law, the lowest point for Post-ABC surveys since the law was passed in 2010.

When the law was written, advocates hoped the employer requirement would help reduce the ranks of the uninsured. Some employers have indeed said they would offer insurance to additional workers, but others have gone in the opposite direction.

Virginia’s situation provides a good lens on why. The state has more than 37,000 part-time, hourly wage employees, with as many as 10,000 working more than 30 hours a week. Offering coverage to those workers, who include nurses, park rangers and adjunct professors, would have been prohibitively expensive, state officials said, costing as much as $110 million.

“It was all about the money,” said Sara Redding Wilson, director of Virginia’s Department of Human Resources Management. “If we could cover everyone, we would.”

It is unclear how many companies have already cut staffing hours this year in anticipation of the law. Mercer, a human relations consulting firm that regularly queries public and private entities, found that 12 percent of employers in a survey last year planned to cut staff hours to avoid a jump in costs under the new rules.

However, the numbers are higher for the retail and hospitality industries, as well as for government, because those employers often rely on a large number of part-timers but do not already offer them benefits, the firm said.

White House officials say there is no evidence that large numbers of businesses are cutting their workers’ hours this year. Rather, they say, Bureau of Labor Statistics numbers suggest full-time hiring has grown despite the employer mandate.

“We are seeing no systematic evidence that the Affordable Care Act is having an adverse impact on job growth or the number of hours employees are working,” said Alan Krueger, chairman of the White House Council of Economic Advisors, adding that “the law is helping make health insurance coverage more affordable, which supports job growth.”

While a number of private businesses cut worker hours this year because of the health care law, they have been loath to do it because of fears of public blowback, said Jared Pope, a Texas consultant whose clients include local governments and businesses. Governments have been more open because they must make their decisions publicly, he said.

He estimated that seven of his 62 clients had capped hours and another 18 were considering it. Those that took the difficult step of curbing part-time hours are not likely to reverse course, only to have to reinstate the limit next year, he said.

“They kind of somewhat (ticked) people off already,” he said. “They don’t want to undo it and become a good guy now, only to do it all over again to be the bad guy.”

Part of the dilemma lies in the definition of “full-time,” which diverges from the industry standard of 40 hours per week. Advocates say the 30-hour bar was supposed to discourage employers from simply shaving a few minutes off a full-time worker’s hours to skirt the law. But it turns out that “an awful lot of people work less than 40 hours a week,” said Timothy Jost, a health policy expert and consumer advocate.

Now, business groups and unions are urging Congress to change the rule to define full time as 40 hours, but they face long odds, given both parties’ reluctance to tinker with the law. Some Democratic-leaning communities, including Dearborn, Michigan, and Long Beach, California, have imposed caps on part-time workers to keep them below the 30-hour threshold.