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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 (131-135):
funnymommy71
by Member on Oct. 4, 2013 at 10:50 PM

 I would LOVE to see this work- I have friends who got sick and literally died because they had no healthcare.  I am only saying that ACA is so huge and complicated that I hope in the 1 year that Business has that THEY can figure it out.  Right now, many and most businesses ARE panicking and cutting down on hiring and hours. 

 


Quoting lga1965:

Based on experience and evidence, I'd say you are wrong. But you don't want to hear that. In my state, people are finding that the ACA is saving them money. And unemployment is lower. Some would want you to think the ACA is a disaster....because they will say.or do anything to demean the President.
You'll see.


Quoting funnymommy71:

 


Hardy har har!!!!!  It's all a laugh riot to you isn't it?  Next time, I will engage with someone who actually cares how ACA effects ALL people including the .... "MARRIED" .... omg, who you seem to be in mocking tone to.   Your utter disdain from your post says it all.   And as far as employment, you are flat out wrong. Ask the people who went from 40- 30 hours, they will tell you.  Hey, I want affordable GOOD healthcare for all- single, families, married -everyone and just seeking solid Actual answers and information.


Quoting lga1965:

If a marriage can't survive Obamacare, it.must have been a pretty darn shaky marriage to begin with. And Obama care isn't having an effect on employment.
Why would I need ro read all of it to know that it shouldn't wreck marriages ?
LOL.
Give me a break.

Quoting funnymommy71:


 Since you seem to be such the expert, have you read and can you interpret the 20,000 odd pages of the ACA?   Exactly how will it effect married people with families then?  Please explain it to me.



 



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.









 



 


 


 


 

thetrollcat
by iluv2meow on Oct. 4, 2013 at 10:54 PM

meh they will just hire illegals. Problem solved

DSamuels
by Gold Member on Nov. 9, 2013 at 4:29 PM

 We went from paying nothing, 100% employer provided insurance from 1979 to 2009 to paying $325 a month next year. The premiums started $176 a month and have increased 20-30% each year. The $100 deductible we had for over 30 years is now $1000.

Quoting roadrunner300:

Our insurance premiums went up 5% this year. Terrible right? NOT!  From 1998 to 2008, our insurance premiums went up every year, an average of 15% PER YEAR. We went from paying 78 dollars for our family in 1998, to 670 dollars per month in 2007. Our premiums are now 703 per month. So in the last four years , since ACA came into existence, our premium growth rate has slowed. Our young adult son is onl our insurance at 23, so we dont have to worry about him getting sick. Our employer got a rebate this year for more than 20% of the premiums paid on our behalf, since the new requirement that insurers must use at least 85% of the premium on patient care or rebate the premiums , has been in effect. Our insurer used to only use 67% of the premium for patient care, and give the excess in huge bonuses to the top management. They cant get away with that anymore. 

The ACA may not be perfect, but what we had WAS NOT WORKING, and I dont see the Republicans putting forth a plan of their own.  In the meantime, my 55 year old neighbour, an educated , hard working woman , can now get insurance, on our state exchange, for 227 dollars per month for a silver plan.  Her husband died last year and she lost his company plan. Her employer, who has only 20 employees, does not offer insurance. She has high blood pressure, and she had cancer when she was 18., nearly 30 years ago. She was turned down by pretty well every major insurer  when she went looking for insurance for prexisting conditions,  and the few that did offer her a plan, offered her one that covered very little, with premiums of over 2000 PER MONTH.  She can now afford to insure herself. She can get a mammogram. She can get her high blood pressure taken care of.

People who make low wages will now be able to get insurance. Ths is not a bad thing, since those people currently use the ER for all of their medical needs, and we end up paying for that , since they cant afford to pay the bill. Aside from that, the greater human good is served by ensuring that we all have health care, since no compassionate society would ever deny  care to the sick.  Most employer plans are not changing at all. Premiums will go up a bit, but they have been going up every year for over a decade now anyway. 

I certainly dont think the law is perfect, but it is doing SOMETHING. I would be very open to hearing what the Republican party proposes to do ( since I am registered Republican) but they arent saying. They have no plan other than the same ole...  Keeping their donor lobbyists from the insurance companies is more important than fixing the problem. And let us not forget that this entire thing was a Republican plan to begin with, with Romney in MA, where it is w orking quite well.  It is about time that Americans enjoy the safety of assured health care, like the rest of the developed world already has.  We should be screaming in the streets to insist that we have health care. Every other country does.  No wonder we rate 18th in life expectancy...other countries care about their people  more. 

I agree with the person who said that if this law is sooooooooooo bad, the R party should let it happen. If it is as bad as they  say,  they will win the next election in a landslide. They will then find it easy to repeal, since the SC has said that funding for it is a tax. Taxation is the power of the gov. and they could easily defund it , if they ever get in power again.  What I think is, they are AFRAID. They are scared shitless that this program is going to be popular and work, like it is in Massachuttes and Hawaii, who currently have a program similar to this.  

 

TranquilMind
by Platinum Member on Nov. 9, 2013 at 5:24 PM
1 mom liked this

 We almost never agree on anything, roma....but you are SO right about this.  It's insanity.

Quoting romalove:

I wish more people would understand that this law is so complicated and has so many "gotchas" that for the few people who are saying "my rates went down!" or "my preexisting conditions don't matter anymore!" there are tons of people who are being forced to pay crazy penalties without it increasing healthcare coverage one iota.

I had posted something a long time ago about an employer who paid 80 percent of his employees' healthcare costs, but it is up to the employee to decide if they want or don't want the healthcare.  If you are making 10 bucks an hour, affordable healthcare may not be your priority, so you can refuse the insurance, and even though your employer was doing the right thing, they will be fined the 2K.

It's nuts.

 

AdrianneHill
by Platinum Member on Nov. 9, 2013 at 6:34 PM
The biggest destroyer of families is the marriage penalty in federal income tax. It was put in the code in the twenties when it was inconceivable that someone would live together without getting married. It was beyond imagining that it would become the norm. They figured people would pay for the privilege of being married because the alternative was an unthinkable sin. Surprise surprise.
Want people to get married again?
Quit making it more cost effective to shack up.

Eta: one of the best things about the Bush tax cut was the suspension of the marriage penalty. It was like "finally a conservative pushing for more marriage who is actually doing something more than putting on the guilt to achieve his ends". I think the marriage rate did go up a little under dubya. But it expired with everything else.
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