The Affordable Care Act (ACA) imposes a penalty on larger employers that do not offer affordable, adequate health care coverage to employees who work 30 hours a week or more. But a Republican House bill (H.R. 2575) would kick the threshold up to 40 hours a week, and a new report from the Congressional Budget Office (CBO) finds that move could cost about 1 million people their employment-based health insurance.
On top of that, the CBO report finds that number of people obtaining coverage through Medicaid, the Children’s Health Insurance Program (CHIP) or health insurance exchanges would increase by between 500,000 and 1 million people and the number of uninsured would increase by around 500,000 people.
The key reason for that, according to a study by the UC Berkeley Labor Center of a companion Senate bill (S. 1188), is that employers could simply cut workers back to a 39-hour week without a penalty and avoid any responsibility to offer health benefits.
The UC Berkeley report also estimates there are 6.5 million people most at risk of having their hours cut back if the Republican bill becomes law. These workers are employed in firms with 100 or more workers, work 40 hours or more a week and currently do not have work-based health insurance. Under the current ACA rules, their employers have to provide coverage or face penalties. However the Republican bill opens the door for employers to cut these workers’ hours and avoid any responsibility or penalty.
But even with the current 30-hour week definition, some employers are cutting back the hours of workers—many of whom worked 30–36 hours a week—to duck providing health coverage and avoid paying the ACA’s penalty.
This summer the delegates to the AFL-CIO Convention 2013 approved a resolution on the ACA that includes a call to fix the employer responsibility rules by:
Applying a full employer penalty for failing to provide affordable comprehensive coverage to workers who average 20 or more hours per week and adding an employer penalty on a pro rata basis for employees who work fewer than 20 hours per week.
In addition, the Part-Time Worker Bill of Rights legislation introduced last year by Rep. Jan Schakowsky (D-Ill.) would require larger employers to provide health care coverage to part-time workers or pay a penalty. Under the bill, large employers would pay a pro-rated penalty for failing to offer benefits to part-time employees.
The United Food and Commercial Workers (UFCW), who have endorsed the bill, say it would level the playing field and protect the millions of part-time workers, especially in retail and other service industries.