This Is Obamacare ‘Working The Way It Should?’

At a town hall meeting earlier this month, President Obama declared that his signature health reform law “is working the way it should.”

That’s news to employers, who are facing higher health costs and staggering administrative burdens thanks to the law. They’ve responded in part by cutting hours and cancelling benefits for workers — to the point that the Administration has unilaterally opted to change the law repeatedly in order to prevent open revolt from employers.

This isn’t the way any law “should work.”

Just a week before Obama’s town-hall comment, the chief actuary at the Centers for Medicare and Medicaid Services reported that the law will drive up insurance costs for 65 percent of small businesses that offer policies today. Eleven million workers will see their premiums climb or their benefits cut.

That’s not exactly how the president claimed Obamacare would work. While stumping for the law back in 2009, he promised that small businesses would see some relief from rising insurance costs, saying that they “could save 25 percent on their premiums by 2016.”

The Obama Administration has tried to placate medium-sized firms — those with 50-99 employees — by delaying the mandate that they offer coverage to January 1, 2016. That’s one year beyond when firms with 100 or more employees must provide coverage — which itself is a delay of one year from what the law originally prescribed.

But in order to qualify for the 2016 exemption, firms must certify to the Internal Revenue Service that they haven’t cut jobs just to get under the 100-worker threshold.

Things aren’t any better for big firms. Delta Air Lines figures its health costs will climb $100 million this year, compared with last year. AOL said that Obamacare is adding $7 million to its insurance costs. Pantry Inc., an operator of convenience stores with about 6,600 employees, recently told investors that Obamacare will add $8 million in health insurance costs. Target has joined several other companies in dumping benefits for part-time workers.

The increased cost of health insurance is hitting companies in other ways, too. A chain of Florida restaurants, for example, had to hire an additional staff member and a consulting firm just to make sure it’s complying with the law — adding half a million dollars in costs each year. The chain has added a 1-percent Obamacare surcharge to its restaurant tabs to cover these added expenses.

Firms like Walgreens, Sears, and Darden Restaurants are giving their workers fixed vouchers to spend in privately run insurance exchanges in order to avoid cost spikes. One-third of employers may follow suit in the next few years, according to a survey from Aon Plc, an insurance broker.

And a new Towers Watson survey has found that while most larger companies plan to continue offering employer health benefits in the near term, only one-quarter of firms are confident that they’ll offer coverage in a decade because of Obamacare.

Unions are bracing for the worst, too. UNITE Here, which represents 300,000 mostly low-wage hospitality workers, said in a scathing new report that Obamacare will likely end up costing its members $5 an hour in lost pay, due to higher insurance costs.

Even public employers like local governments, community colleges, and schools are feeling squeezed by Obamacare.

A local North Carolina news report said that the UNC college system could face as much as $47 million in added expenses, since it employs thousands who currently aren’t covered by the university but will have to be under the law.

UNC’s chief operating officer, Charles Perusse, called Obamacare “an unfunded mandate that is coming down on us.”

According to The New York Times, police dispatchers, prison guards, coaches, custodians, cafeteria workers, and others have seen their hours cut because of Obamacare.

Yet the administration has been claiming for months that Obamacare is having no effect on jobs and isn’t causing a shift to part-time work.

That’s only true if you redefine “full-time,” as the administration has. In late February, it admitted that the numbers it had been counting workers putting in 29.5 hours a week as full time.

When Investor’s Business Daily adjusted for that error, it found that the ratio of full-time workers to part-timers “sank to the lowest level in 13 years.” Worse, the average workweek for those in low-wage industries has dropped sharply since 2012 while workers in generally higher wage industries have seen their average work hours steadily climb.

If Obama had told the public in 2009 that this was how Obamacare “should work,” the law would never have made it to his desk in the first place.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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