Here’s the deal—40 hours is full-time but only in Medicaid expanded states

The Hill’s Congress Blog
September 24, 2013

By Frank Knapp Jr.  

Franchise owners descended on Capitol Hill last week to lobby for a modification in the Affordable Care Act.  Their complaint is that under ObamaCare, starting in 2015, businesses with 50 or more full-time employees will either have to offer their workers affordable health insurance or pay a penalty fee under the law’s shared responsibility mandate.

But there’s an easy solution that answers their concerns and at the same helps address one of the biggest threats to success for ObamaCare. 

While my business organization favored no mandate for businesses to offer health insurance — or alternatively that businesses with fewer than 100 employees should be exempted under such a provision — we did support the overall healthcare reform effort and ultimately the final version of ObamaCare. The health insurance affordability crisis demanded Congressional action. Plus, by exempting small businesses with fewer than 50 employees from the requirement of shared responsibility, approximately 96 percent of all businesses across the nation are under no obligation to offer health insurance to their employees.

Specifically what the members of the International Franchise Association (IFA) are asking Congress to do now is change the law so that only employees working at least 40 hours a week are counted toward that 50 full-time employee mark. The law now counts employees working at least 30 hours a week as full-time employees.

These business owners, primarily in hospitality and retail, say that they will cut the hours of their workers to stay under the present 30-hour per week rule.  The result, they say, would be employees making less money and still not receiving health insurance.

But that’s not completely true. These low-income workers with reduced hours almost assuredly would receive health insurance if their states expanded Medicaid as provide for under ObamaCare.

The primary purpose of the Affordable Care Act was to get affordable health insurance for almost every citizen. The shared responsibility mandate was simply a way to get the big business community to help with the cost.

Unfortunately, now the larger issue that threatens the success of the healthcare reform is the refusal of at least 21 states to expand Medicaid. Without this expansion almost five million of the mostly working, low-income people in these states will still be uninsured and continue to drive up the cost of health insurance for people with coverage due to cost-shifting. This “hidden tax” on every health insurance policy to pay for the uncompensated care for the uninsured adds about $1000 to every family policy per year according to the actuarial firm of Millikan, Inc.

A compromise is in order that will give these franchisees the relief they are looking for and address the Medicaid expansion problem.

Congress and the president should consider changing the definition of a full-time employee to at least 40 hours per week but only in states that expand Medicaid up to 133 percent of the federal poverty level.  Since logic and common sense were rejected by the states that refused to expand Medicaid, maybe pressure by the IFA business members will be more effective.  The result could be a win-win-win—businesses, low-income workers and insurance policyholders.

Knapp is the president of the South Carolina Small Business Chamber of Commerce and the co-chair of the American Sustainable Business Council Action Fund.

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