Obamacare is proving the old axiom that politics makes strange bedfellows. Organized labor and the business community are the latest unlikely pair to unite in opposition to the healthcare reform law. Both groups are discovering that Obamacare will substantially increase the cost of providing health benefits to the detriment of the workers they represent or employ.
Businesses are focusing their ire on Obamacares employer mandate, which requires every company with more than 50 full-time employees furnish their workers with affordable health care coverage starting in 2014.
Employers that dont will face a fine of $2,000 per worker, with the first 30 employees exempt from the calculation. If they offer coverage that Obamacare deems unaffordable or insufficient, then theyll be subject to a fine of $3,000 for every worker who receives subsidized coverage through the laws insurance exchanges.
Making matters worse, anyone working more than 30 hours a week will be considered a full-time employee. Some members of Congress are now suggesting that the number of hours be raised to 40 to comply with federal labor law defining full-time employees.
The mandate will therefore saddle businesses with huge new costs. Theyre responding not by swallowing those costs but by trying to wriggle free from the mandate.
AAA Parking, for example, has said that it will shift many full-time positions to part-time. Circle K Southeast convenience stores did the same. Andy Puzder, CEO of CKE Restaurants, the parent company of Carls Jr. and Hardees, has said that his restaurants have started replacing full-time workers with part-timers. And Walmart has been hiring more temp workers than ever before.
The trend is widespread enough that its showing up in national labor market data. Retailers have been cutting hours at the fastest rate since 1980. Some large businesses, meanwhile, are looking to offer skinny health plans that cover only inexpensive benefits like preventive care but not hospitalization and cost as little as $40 a month.
Workers may be able to reject these plans and go shopping in the exchanges if they want more generous coverage. But theyll have to pay for it. Even with the assistance of federal subsidies, a worker making $12 an hour could have to pay as much as $140 a month for an exchange plan, according to the Wall Street Journal.
President Obamas erstwhile allies in the labor movement are similarly concerned about how his signature law will send their health costs skyward. At issue are so-called Taft-Hartley plans. These multi-employer health plans are jointly run by labor unions and employers and provide about 20 million union members and their families with coverage.
Starting next year, Taft-Hartley plans will have to comply with many of Obamacares cost-inflating mandates including its ban on lifetime benefit limits and a new $63-per-enrollee fee to help cover people with pre-existing conditions.
The plans are already more expensive than conventional, single-employer coverage. And workers covered by them are not eligible for federal subsidies to help offset their cost.
Further, many of the firms that have helped underwrite these multi employer plans are too small to be subject to the individual mandate. So they have unstoppable incentives to push workers onto the exchanges where many will pay higher costs for poorer insurance with a more limited network of providers, as Joseph Hansen, the head of the 1.3-million member United Food and Commercial Workers Union (UFCW), recently argued.
Add it all up, and Obamacare actually punishes its supposed allies in organized labor. First, its many mandates raise the cost of unions health plans directly.
In so doing, the law makes firms that employ union workers less competitive than non-union firms. Union firms and workers will have to shoulder the entire cost of their health plans while their non-union competitors will be able to get subsidized coverage through the exchanges.
Indeed, by only subsidizing health plans purchased in the exchanges, Obamacare undermines one of organized labors chief strengths the ability to deliver its members generous benefits. Some workers may wonder why they should pay union dues if they can get subsidized insurance coverage through the exchanges.
With all this in mind, its no wonder that the hotel workers union UNITE HERE and the International Brotherhood of Teamsters in addition to the UFCW have expressed concern about the future of their health plans under Obamacare. The union representing roofers has called for Obamacares repeal.
Even local governments are fretting about how theyll pay for health care once the law takes full effect next year. Birmingham, Mich., announced in May that it would be reducing hours for most of its seasonal employees. We simply cant afford the Affordable Care Act, explained city commissioner Gordon Rinschler.
Rare is the issue that business, labor, and local government agree on. But Obamacare has brought these disparate groups together in vocal opposition. Congress should heed their call and repeal the law.