Having assumed full control of Congress this week, Republicans are trying to seem less “scary.”
One of the first items on their agenda in January is President Obama’s signature health care legislation. But Republican’s won’t be pushing for a full repeal of Obamacare. They’re not even pushing for partial repeal. Instead, they’re angling for a seemingly incremental change: to be counted as full-time, workers should need to rack up 40 hours a week, not 30 hours.
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The rule is part of Obamacare’s employer mandate, which requires firms with 50 or more full-time employees to provide health coverage and begins to take effect this year. Weakening the mandate is one of the first legislative priorities for the new GOP-controlled Congress, which is betting that Democrats will help them bring the proposed change to the president’s desk.
“They think there’s a good chance they’ll get a lot of Democratic votes for this. When you have a new majority coming, Republicans will be looking for a few things that will be easy for them to pass,” said Stephen Nothrup, a lobbyist and former Senate GOP staffer on health policy. “They want to put some early points on the board.”
President Obama has already indicated that he would veto the measure, but business groups argue it’s a commonsense change that isn’t intended to undermine the central pillars of the Affordable Care Act. “We maintain this is not a campaign to repeal and replace the ACA. It’s a return to the traditional definition of 40 hours,” said Stephen Caldeira, president of the International Franchise Association. The employer mandate predominantly affects restaurant, retail, agriculture and other low-wage industries that tend to have part-time employees working closer to the 30-hour threshold.
But the GOP’s proposed change is hardly a minor tweak to Obamacare—and not all conservatives agree it’s the best way forward.
It would effectively gut the employer mandate, reducing employer-sponsored coverage by 1 million people and costing $53 billion over the next ten years, according to the Congressional Budget Office. But it would also make it even more likely that the Affordable Care Act will have negative consequences for ordinary Americans, according to Larry Levitt of the Kaiser Family Foundation.
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“A change in the definition of full-time work to 40 hours per week would essentially eviscerate the requirement that employers offer coverage to their employees, while still providing an economic incentive for employers to reduce hours for uninsured workers,” he said.
The reason that the architects of Obamacare set the definition of full-time work at 30 hours in the first place was to minimize the disruption to the labor market. Far more employees work close to 40 hours a week than 30 hours a week, so if the threshold were raised, more employers could be tempted to reduce hours to avoid complying with the mandate.
“It would make it easier for employers to reduce hours for workers who don’t now have health insurance on the job, since 39 hours is still basically a full-time work week and there would be little disruption for employers moving many of their workers to just below the 40 hour threshold,” Levitt said.
That’s why some conservative critics of Obamacare believe that changing the threshold would be worse than doing nothing at all.
“Even if you just look at workers not now offered employer coverage, this difference means that putting the cut-off for the employer mandate at 40 hours would likely put far, far more people at risk of having their hours cut than leaving it at 30 hours. That would make for a worse effect on workers and on the economy,” National Review’s Yuval Levin wrote in November. “So by setting the definition lower, Obamacare’s architects were trying to mitigate the damaging effects of the employer mandate some, and by setting it higher Republicans would be worsening those effects.”
Levin is no fan of the current employer mandate, either. But he believes that Republicans should push for full repeal of the provision instead.
Republicans are still betting that a handful of Democrats will join their efforts to roll back the employer mandate. Eighteen Democrats joined the GOP last year in changing the threshold to 40 hours, though many of them were moderates who’ve since lost their seats to Republicans. They’re also likely to argue that the $53 billion price tag for making the change masks the real cost of the status quo.
“Republicans look at the employer mandate as something that costs jobs in the long run — essentially what they perceive to be a job-killing tax that doesn’t necessarily need to be offset,” said Northrup.
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The fierce business lobbying against the mandate has already convinced the Obama administration to delay it repeatedly.
Originally scheduled to take effect in 2014, medium-sized firms with 50 to 99 full-time employees now have until 2016 to comply with the new coverage requirements. Large firms with 100 or more full-time employees will have to provide coverage for 70% of their workers in 2015 and all of them in 2016. It also imposes new minimum coverage rules to prevent employers from relying on skimpy health plans to cut costs. Firms that don’t comply will be subject to fines ranging from $2,000 to $3,000 per worker.
Both Republicans and business groups argue that the requirements hold back businesses and hiring. “One problem with the health care law – one of many – is that because of its costs and mandates, small businesses face higher costs and have to hold off on hiring,” said Rep. Rodney Davis of Illinois in the first weekly GOP address of 2015.
Republicans also point to outside liberal critics of the employer mandate, who have argued that the provision does little to expand coverage under the law.
More than 92% of the employers subject to the mandate already provide health care coverage for their employees, according to the Kaiser Family Foundation. Many of those who don’t receive employer coverage could qualify for subsidized coverage under Obamacare’s exchanges or Medicaid expansion, said John Holahan of the Urban Institute, who has long opposed the employer mandate. The CBO and JCT estimate that about 500,000 will be uninsured if the threshold is changed to 40 hours, while about 500,000 to 1 million will receive coverage through the exchanges or Medicaid.
“There are losers, we’re just saying that the losses are not that great. The employer market would stay largely intact and you would avoid some of the distortions you have in the labor market,” said Holahan. He believes that even fewer will lose coverage than the official budget analysts estimate, arguing that employers have strong incentives to keep employees covered.
Both sides hope that their strange bedfellows will help their cause, allowing them to claim the mantle of bipartisanship. “More American people sent a message in the midterm elections that they want America to work in a bipartisan way,” said Caldeira of the International Franchise Association. He believes that more Democratic votes for changing the mandate will be best way to convince President Obama to support the change. “The president would take that as a very strong signal that this is something that has bipartisan support.”
But the White House insists it’s not budging on the issue. “This proposed change would actually do a lot of harm, not just to the Affordable Care Act but to a substantial number of workers across the country,” spokesman Josh Earnest said on Tuesday.
Suzy Khimm