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Will Obamacare hurt job creation and marriage? Commentary: Families and employers pay the price

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At one time, getting a job was not that much of a problem. Neither was getting married. But the Affordable Care Act appears to create substantial disincentives both to hiring and marriage, potentially changing the fabric of American society in serious ways.

Let’s first look at hiring.

The Affordable Care Act is partly responsible for the slow jobs recovery. If employers with 50 or more employees do not offer the right kind of health insurance, and at least one employee gets subsidized coverage on the exchange, they are faced with penalties of $2,000 per employee per year. Since the first 30 workers are exempt from the penalty, moving from 49 to 50 workers can cost an employer $40,000 a year.

No wonder that many small businesses are opting to stay at 49 workers. If they decide to expand, they can use temporary workers or contract employees.

Bob Funk, president and founder of Express Employment Services, the fifth-largest employment agency in America, told The Wall Street Journal in an interview published last week, “Obamacare has been an absolute boon for my business…We’re up 8% this year. But it’s just terrible for the country.”

Funk continued, “Firms are just very reluctant to hire full-time workers. So they are taking on more temporary help, which is what we do.”

Companies can get around the penalty by hiring part-time workers, because they do not owe the $2,000 penalty on those who work fewer than 30 hours a week. Many companies such as SeaWorld SEAS -1.05%  , Wal-Mart WMT -0.35%  , and Lands’ End SHLD -2.20%  , are substituting part-time for full-time workers.

As well as effects on hiring, the subsidies in the Affordable Care Act, could increase the incentive to divorce and discourage marriage.

Under the Act, if workers have affordable single-family coverage from an employer — coverage that by law workers are obligated to accept — their family members will not be eligible for premium subsidies on the exchanges. This can make the cost of insurance for some low- or middle-income families unaffordable. But if they divorce, they get the subsidy.

Without subsidies, low-income families will not be able to afford to buy insurance on the state exchanges. The Internal Revenue Service estimates that family plans will cost $20,000 (in after-tax dollars) a year by 2016. Anyone under 400% of the poverty line, currently $94,000 for a family of four, qualifies for a subsidy — unless a family member has employer-provided insurance.

In a 2011 National Bureau of Economic Research working paper , Cornell University professor Richard Burkhauser, Indiana University professor Kosali Simon, and Cornell PhD candidate Sean Lyons showed that in 2014, when the law will take full effect, 13 million low-income Americans may be unable to get subsidized health insurance through new state health care exchanges because one family member has employer-provided coverage for that person only.

Perversely, the only way for other family members to get subsidized coverage would be for the spouses to get divorced. Then the spouse without coverage and the children could get coverage on the exchange.

This provision of the Act also discourages marriage. Say that Jeff, who receives health insurance from his employer, wants to marry Jenny, who is buying her subsidized health insurance from the state exchange. If they married, Jenny would no longer qualify for subsidized coverage.

Furthermore, since premium subsidies are on a sliding scale, two married people getting their coverage on the exchange would pay more than if they were single.

Those at 133% of the poverty line can pay no more than 3% of their income in premiums. Someone at 400% of the poverty line can pay no more than 9.5% of income. Two people making $32,000 annually would qualify for subsidies when single, but not when they got married and earned a combined income of $64,000. See 2013 poverty guidelines here.

The system is set up so that low-income employees with families may prefer to work for firms that do not offer health insurance. In that way, they can qualify to purchase family coverage through the exchange, and get a subsidy.

Furthermore, if the employer does offer health insurance, low-income workers with dependents might prefer that the coverage is unaffordable, that the employee’s share of the premium exceed the affordability test. That is because if coverage is unaffordable, then the employee will be able to buy subsidized insurance for his family on the exchange.

The employer would owe the Treasury a $3,000 penalty for providing unaffordable coverage for each employee whose coverage is unaffordable, but many workers would rationally accept $3,000 in lower wages to get the opportunity to buy subsidized health insurance.

The incentives are different for employees earning above 400% of the poverty line because they will not qualify for subsidies. They will be better off with an employer who does offer health insurance, because it’s a tax-free benefit. To the extent that premiums are paid through an employer, these can be paid out of pre-tax income — income that is not taxed.

Families without employer-provided insurance who do not qualify for a subsidy will be worse off because they will have to buy insurance with after-tax dollars on the exchange. So to pay for a $20,000 family policy — the Internal Revenue Service’s estimate of the cost of a health insurance plan on the exchange in 2016 — a person in the 50% federal and state tax bracket would have to earn an extra $40,000 in pre-tax dollars (because half would be paid in tax). A taxpayer in the 33% tax bracket would have use $30,000 in pre-tax dollars to buy a $20,000 policy.

That would be a substantial change from today, both in the price of the insurance and in its tax treatment. In order to retain higher-paid employees, firms are going to have to offer health insurance as a benefit.

The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.

There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging.

Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

Minnow Slayer

by on Sep. 30, 2013 at 6:34 AM
Replies (11-20):
romalove
by Roma on Sep. 30, 2013 at 8:10 AM
8 moms liked this


Quoting motha2daDuchess:

the sky is falling, the sky is falling!!!!! except it isnt this article is ridiculous...you can not blame something that hasnt happened....like people have stated previously, if the ACA was really that bad, let it happen then reap the benefits at midterm elections....

ACA is bad, but I don't care about them "reaping the benefits" at midterm elections.

I care about how messed up the healthcare delivery system in this country is going to be, how many people are going to be paying tons of money for nothing, and how long it is going to take to undo the damage this bill is going to wreak on this country.

Fasten your seatbelts, it's going to be a bumpy ride.....

collectivecow
by Gold Member on Sep. 30, 2013 at 8:11 AM
2 moms liked this

This looks really bad.

Carpy
by Ruby Member on Sep. 30, 2013 at 8:15 AM
5 moms liked this

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.

Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 


The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.


There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging


************


Oh boy!  This is so overblown and wacky I have to laugh.


Where did you find this silly woman's Blog, Carpy? She's a nut job.



Minnow Slayer

lga1965
by on Sep. 30, 2013 at 8:17 AM
Ignorant...the famous word at CM.

Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.



Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 



The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.



There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging



************



Oh boy!  This is so overblown and wacky I have to laugh.



Where did you find this silly woman's Blog, Carpy? She's a nut job.



Posted on CafeMom Mobile
billsfan1104
by Jules on Sep. 30, 2013 at 8:23 AM
5 moms liked this
And yet you are one of the biggest violators.
You discounted someone who has a degree in economics simply because you disagree with her. Instead of pointing out where she could be wrong, you called her crazy. But that is typical from you.


Quoting lga1965:

Ignorant...the famous word at CM.



Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.





Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 




The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.




There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging




************




Oh boy!  This is so overblown and wacky I have to laugh.




Where did you find this silly woman's Blog, Carpy? She's a nut job.



lga1965
by on Sep. 30, 2013 at 8:27 AM
2 moms liked this
Yah, I'm a violater. She's using a brand new excuse for hating the,ACA....it's going to destroy marriage and family.
LOL.
That's crazy. A right wing lie
I really don't care if you think I "violate" anything. You have me beat in that contest. Harharhar.


Quoting billsfan1104:

And yet you are one of the biggest violators.

You discounted someone who has a degree in economics simply because you disagree with her. Instead of pointing out where she could be wrong, you called her crazy. But that is typical from you.





Quoting lga1965:

Ignorant...the famous word at CM.





Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.







Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 





The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.





There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging





************





Oh boy!  This is so overblown and wacky I have to laugh.





Where did you find this silly woman's Blog, Carpy? She's a nut job.



Posted on CafeMom Mobile
motha2daDuchess
by Bruja on Sep. 30, 2013 at 8:33 AM
3 moms liked this
Anticipation is worse than fear...
billsfan1104
by Jules on Sep. 30, 2013 at 9:16 AM
4 moms liked this
Where is the debate IGA?? Why don't you debate the part that is a so-called lie?? Instead you call people names and call them nut-jobs, but you do not back up anything.
But then you bitch and moan, when the others call names.


Quoting lga1965:

Yah, I'm a violater. She's using a brand new excuse for hating the,ACA....it's going to destroy marriage and family.

LOL.

That's crazy. A right wing lie

I really don't care if you think I "violate" anything. You have me beat in that contest. Harharhar.





Quoting billsfan1104:

And yet you are one of the biggest violators.


You discounted someone who has a degree in economics simply because you disagree with her. Instead of pointing out where she could be wrong, you called her crazy. But that is typical from you.








Quoting lga1965:

Ignorant...the famous word at CM.







Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.









Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 






The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.






There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging






************






Oh boy!  This is so overblown and wacky I have to laugh.






Where did you find this silly woman's Blog, Carpy? She's a nut job.



Carpy
by Ruby Member on Sep. 30, 2013 at 9:19 AM
1 mom liked this
I would like to see her counterargument as well, but won't hold my breath.

Quoting billsfan1104:

Where is the debate IGA?? Why don't you debate the part that is a so-called lie?? Instead you call people names and call them nut-jobs, but you do not back up anything.

But then you bitch and moan, when the others call names.




Quoting lga1965:

Yah, I'm a violater. She's using a brand new excuse for hating the,ACA....it's going to destroy marriage and family.


LOL.


That's crazy. A right wing lie


I really don't care if you think I "violate" anything. You have me beat in that contest. Harharhar.








Quoting billsfan1104:

And yet you are one of the biggest violators.



You discounted someone who has a degree in economics simply because you disagree with her. Instead of pointing out where she could be wrong, you called her crazy. But that is typical from you.











Quoting lga1965:

Ignorant...the famous word at CM.









Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.











Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 







The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.







There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging







************







Oh boy!  This is so overblown and wacky I have to laugh.







Where did you find this silly woman's Blog, Carpy? She's a nut job.



billsfan1104
by Jules on Sep. 30, 2013 at 9:21 AM
3 moms liked this
And I dislike the ACA very much. And not because it's from Obama.
There are certain portions I do like, but for the most part it will be horrible for my family in terms of costs.
My health insurance went up 24% and it's suppose to go up even more. We cannot shop the exchange, because my employer meets all the guideline set forth by Obamacare. So no matter how much my insurance is, it goes up. My deductible went up. So now my deductible is 3600 dollars, and my insurance for three people is 364 dollars a month.
I am scared about the coverages, because I have breast cancer. I do not know if corners are going to be cut, to keep costs down. We won't know until tomorrow.
So instead of calling people wackos, crazy, nut-jobs or liars, why don't you take time out to listen to their concerns?


Quoting lga1965:

Yah, I'm a violater. She's using a brand new excuse for hating the,ACA....it's going to destroy marriage and family.

LOL.

That's crazy. A right wing lie

I really don't care if you think I "violate" anything. You have me beat in that contest. Harharhar.





Quoting billsfan1104:

And yet you are one of the biggest violators.


You discounted someone who has a degree in economics simply because you disagree with her. Instead of pointing out where she could be wrong, you called her crazy. But that is typical from you.








Quoting lga1965:

Ignorant...the famous word at CM.







Quoting Carpy:

That is similar to what I thought when I saw your ignorant reply.

Quoting lga1965:

Oh boy.









Quoting Carpy:


Diana Furchtgott-Roth, former chief economist of the U.S. Department of Labor, directs Economics21 at the Manhattan Institute.

I think I will defer to her credientials over yours

Quoting lga1965:

 






The structure of the Affordable Care Act will increase the already widening gap between the rich and the poor. More divorces and fewer marriages at the lower end of the income scale result in more households headed by singles. Children in these families often have fewer advantages and lower educational performance, making it harder for them to get a well-paying job when they grow up.






There will be many glitches when the state exchanges open for business on Oct. 1. But the effects of the Act on job creation and marriage — two of the stepping stones to the American dream — are even more damaging






************






Oh boy!  This is so overblown and wacky I have to laugh.






Where did you find this silly woman's Blog, Carpy? She's a nut job.



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