Health Care & Life Sciences and Health Care & Insurance

Hoosier lawmakers attack Obamacare's 30-hour rule

February 17, 2014

Two Indiana lawmakers are leading a charge in Washington to repeal a provision of Obamacare that defines full-time work as 30 hours per week.

U.S. Rep. Todd Young and U.S. Sen. Joe Donnelly have sponsored bills in the House and Senate, respectively, that would restore 40-hours-per-week as the federal definition of full-time work.

It’s a change that Indiana employers say is needed, as they have responded to the Obamacare rule by reducing hours for part-time workers below the 30-hour rule. This has reduced hours for thousands of Hoosier workers at restaurants, retailers, school corporations, municipalities and colleges.

The 30-hour rule created enough concern among school corporations—which have part-time bus drivers, cooks and other personnel—that 39 of them in Indiana have sued the Obama administration to nullify Obamacare’s taxes on government employers that do not provide affordable health benefits.

The Indiana Chamber of Commerce strongly favors the Forty Hours Is Full Time Act, as the Donnelly-sponsored bill is known. And Ivy Tech Community College President Tom Snyder went to Washington this month to testify in favor of Young’s bill, which is called the Save American Workers Act.

But the fix proposed by Young and Donnelly would harm more than it would help, according to an analysis by the University of California-Berkeley’s Labor Center. It found that Obamacare’s 30-hour rule puts 2.3 million workers at risk for having their hours reduced.

But reinstituting the 40-hour rule would put more than 6.5 million workers at risk for reduced hours, according to a December report. It would also effectively kill the employer mandate, which requires employers with 50 or more workers to provide affordable health insurance coverage, or else pay a $2,000 per-worker penalty when the workers instead buy coverage in Obamacare’s individual insurance exchanges.

“The Forty Hours is Full Time Act would make it nearly costless for employers to reduce work hours to avoid the penalty given the ease of moving from a 40-hour to 39-hour work schedule,” wrote Ken Jacobs and Dave Graham-Squire, researchers at the UC-Berkeley Labor Center. “The Forty Hours is Full Time Act would effectively eliminate the employer requirements under the Affordable Care Act. It would result in a reduction of employer-sponsored insurance and a shift of costs from employers onto the federal government.”

In spite of this prediction, it appears that Donnelly’s bill is gaining support in the Senate Finance Committee, said Susan Rider, a benefits broker at Indianapolis-based Gregory & Appel who tracks federal legislation related to health benefits.

“Any employer that has folks with variable hours is dramatically affected,” Rider said.

Donnelly, a Democrat, co-sponsored the bill last summer with Sen. Susan Collins, a moderate Republican from Maine.

“It is my view—based on what I hear from Hoosier employees and employers—that we need to fix the definition of ‘full-time employee’ under the Affordable Care Act,” Donnelly said this month in a statement. “I hope we can work together, both Democrats and Republicans, to make the health care law work better for Hoosier families, employees, and employers.”

They have attracted 11 more co-sponsors, although only one is a Democrat.

That makes the bill’s fate in the Democrat-controlled Senate uncertain at best.

Young’s bill has attracted 205 sponsors, all but six of them Republicans.

“The new class of employees dubbed the ‘Obamacare 29ers’ continues to grow,” Young said before taking testimony Feb. 4 on his bill. He cited the UC-Berkeley research on how Obamacare's 30-hour rule puts workers at risk, but not its research on how restoring the 40-hour rule would affect more workers. “The closer we get to January 1, 2015, the more I suspect we’ll continue to see the ranks of 29ers grow.”

Ivy Tech plans to reduce the hours of about 1,000 of its 4,500 adjunct professors. Those are the professors who teach 12 or more credit hours per semester. That’s because Obamacare’s regulations, which are still being written, call for the out-of-class preparatory time of adjunct professors to be counted as working hours. Ivy Tech expects the Obama administration to require two hours of prep time to be counted for every hour in class. So only by limiting its adjunct professors’ teaching to nine hours per semester can the college keep their total number of hours worked under 30 per week.

If Ivy Tech did provide health insurance to those 1,000 adjunct professors, it would cost the school $10 million to $17 million, Snyder estimated.

“Like many community colleges, our funding does not allow us to absorb large unfunded mandates such as any employee who exceeds 30 hours being offered health insurance,” Snyder said. "The potential penalties we could face for exceeding these 30 hours, knowing that we have thousands of adjuncts, of course is not an option we could even consider.”

But the researchers at the UC-Berkeley Labor Center think there is a better solution to the challenge. Lawmakers could pro-rate Obamacare’s penalties, so that they increase with the number of hours an employee works. Part-time workers nowhere near the 30-hour threshold would result in only small penalties if they were not provided health insurance, but workers with nearly 40 hours of work would come closer to the full $2,000 penalty, making it more likely that employers would offer health benefits to them.

 

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