HHS Ruling Helps Workers But Spells Trouble for Employer Mandate

Jul 9, 2013Richard Kirsch

Workers won't be denied coverage because of the reporting delay, but they may not want to give up the insurance they get through the exchanges come 2015.

Workers won't be denied coverage because of the reporting delay, but they may not want to give up the insurance they get through the exchanges come 2015.

In my post last week, after the announcement that the employer mandate would not be enforced for a year, I wrote that it was vital that the Obama administration show as much concern for the workers who might be denied health insurance as it did for employers. Specifically, I asked the administration to make clear that a worker would be able to get subsidized health coverage through the new exchanges based on filling out an application, without having to get proof from an employer. On Friday, HHS issued that ruling.

The decision not to enforce the employer mandate for a year is certain to cost some people health coverage as some employers decide to postpone complying with the law. Their workers, possibly also confused by the delay, may not apply for subsidized coverage. But if they do apply, the new ruling will be a big help to them.

As noted, the HHS ruling made it clear that the exchanges should rely on the information workers provide rather than proof from their employers. Workers can ask their employer to help provide the information, but that is not a requirement. And the exchanges can try to verify the information if possible, but that will be difficult and again is not a requirement. Under the new ruling, a worker who reports that he or she is not offered affordable health coverage at work will qualify for subsidized coverage. (Affordability is measured by the employee share of premiums being no more than 9.5 percent of their income.)

The HHS announcement is an important measure to help get coverage to uninsured workers. Of course, it has received little attention compared to the news about the employer mandate. That news is almost always reported incorrectly, with most articles saying that the mandate itself has been postponed for a year. What has been postponed is the enforcement of the mandate through penalties for employers that do not comply. It’s still the law that large employers are required to offer affordable coverage. But if they don’t, there will be no penalty.

There’s one more potentially interesting twist to this story, one that could provide real benefit to some workers in 2014 and then highlight a big problem with the employer mandate in 2015. Workers who get health insurance through the exchanges will get coverage that is much more affordable – lower premiums and out-of-pocket costs than health insurance offered by employers. This will be particularly true for the low-wage employers most likely to not offer coverage. As a result, workers who get coverage in 2014 in the exchange may find in 2015 that they are forced to get coverage that is much more expensive to buy and use, and covers fewer health services, from their employers. The workers will want to stick with the exchanges, putting pressure on employers to pay a fine and let the employees stay in the exchanges, or to improve the coverage they offer.

We are likely to see a lot more debate about how to reform the employer mandate in Congress this year and next as the ACA is implemented. In a future post, I’ll describe ways to change the employer mandate to make good health coverage more affordable for workers. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

Health care cost image via Shutterstock.com.

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Daily Digest - July 5: Part-Time World

Jul 5, 2013Rachel Goldfarb

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The Part-Timer Problem (TAP)

Harold Meyerson wonders if the employer mandate would really have helped many get health insurance in the first place, since full-time jobs have been on the decline for years. Saner, he thinks, would be to separate employment and health care entirely.

Click here to receive the Daily Digest via email.

The Part-Timer Problem (TAP)

Harold Meyerson wonders if the employer mandate would really have helped many get health insurance in the first place, since full-time jobs have been on the decline for years. Saner, he thinks, would be to separate employment and health care entirely.

Job Creation and the Affordable Care Act Have Little to Do with Each Other (On The Economy)

Jared Bernstein argues that the Affordable Care Act should not effect job growth, and in fact could lower the cost of labor. Besides that, he thinks we should judge the bill as a health care bill, because it isn't a jobs bill.

The GOP’s Endless War on Obamacare, and the White House Delay (Robert Reich)

Robert Reich suggests that the delay in implementing the employer mandate will only give Republicans more time to attempt to convince Americans that they don't want this law that will help to reduce health care inequality.

As Sequestration Cuts Bite, Congress is Content with Recrimination (The Guardian)

Heidi Moore sees the lack of action to fix sequestration as a sign of the larger problem of Congress's unwillingness to actually pass a budget or any other major legislation. She thinks the window for that work will close as soon as midterm campaigns begin.

How the Sequester Savages the Long-Term Unemployed (The Nation)

George Zornick reports that as sequestration continues, cuts to Emergency Unemployment Compensation are putting the long-term unemployed in an even tighter spot. His interview subject points out that meanwhile, Congress is still drawing a full salary and benefits.

Four Years Into Recovery, Austerity’s Toll is At Least 3 Million Jobs (Working Economics)

Josh Bivens and Heidi Shierholz look at data that demonstrates just how much austerity has cost job growth over the past four years, and suggest that ending austerity policies, starting with sequestration, is the most logical next step.

Rosy Data Suggest Faster Job Growth (WaPo)

Ylan Mui explains why some groups are saying that the jobs numbers being released this morning will be higher than recent months. Others think it is more likely that job growth will prove to continue at the same slow and steady pace.

 

 

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Daily Digest - July 4: Holiday Edition

Jul 4, 2013Rachel Goldfarb

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Happy Fourth of July! Today's Daily Digest is an abridged holiday edition. We will return to the full-length Daily Digest tomorrow.

Paid Sick Leave Laws Generate More Concern Than Pain (NYT)

Click here to receive the Daily Digest via email.

Happy Fourth of July! Today's Daily Digest is an abridged holiday edition. We will return to the full-length Daily Digest tomorrow.

Paid Sick Leave Laws Generate More Concern Than Pain (NYT)

Robb Mandelbaum reports that it turns out paid sick leave laws aren't such a big deal for small businesses after all. In municipalities that have already instituted such laws, more business owners are finding the costs minimal.

Progressives' Post-DOMA To-Do List (TAP)

In response to people questioning whether same-sex marriage has eclipsed everything else on the progressive agenda, Scott Lemieux has a list of projects to work on now that DOMA has been overturned.

Less-white and less male: Labor movement finds new support (MSNBC)

Ned Resnikoff reports on a survey that gives a new image of union supporters, full of women, people of color, and young people. Roosevelt Institute Fellow Dorian Warren explains that the past picture of labor is due to exclusionary policies that have shifted in most unionized fields.

New on Next New Deal

Will Delaying the Employer Mandate Deny Health Coverage to Workers?

Roosevelt Institute Senior Fellow Richard Kirsch questions whether the Obama administration's decision to push back the employer mandate in the Affordable Care Act for a year is going to increase costs for employees who thought they would be insured in January.

New Texas Abortion Law Could Be Worst Yet for Poor Women

Roosevelt Institute Fellow Andrea Flynn examines how the abortion law being debated in a second special session of the Texas legislature after its defeat by filibuster last week will harm poor women by destroying their access to clinics that provide low-cost reproductive health care.

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New Texas Abortion Law Could Be Worst Yet for Poor Women

Jul 3, 2013Andrea Flynn

The controversial SB 5 is the latest case of the Texas GOP pushing anti-abortion measures that marginalize low-income women.

The controversial SB 5 is the latest case of the Texas GOP pushing anti-abortion measures that marginalize low-income women.

Some 5,000 orange-clad men and women invaded the Texas capital in Austin on Monday in an emotional and enthusiastic show of support for reproductive rights. They faced off with Republican lawmakers still resolved to pass SB 5, the very bill limiting abortion access that was defeated last week after Senator Wendy Davis’s 11-hour filibuster. Yesterday, nearly 2,000 people showed up to testify against the bill as it was considered by the Texas House Affairs Committee, which approved it 8-3.

This latest effort to roll back women’s rights in Texas has met fierce opposition and resolve from Texans and other Americans who recognize the value of women’s health care. “When you silence one of us, you give voice to the millions who will continue to demand our lives, our choices, our independence,” Ilyse Hogue, president of NARAL Pro-Choice America, reminded us at Monday’s rally.

It has also highlighted the deep gulf between the lived experiences of women in Texas, particularly low-income women, and lawmakers who have inserted themselves into decisions that should only be made by women and their physicians.

Monday’s protest took place as Texas lawmakers convened for a second special session called by Governor Rick Perry. The bill they’re considering would make abortion after 20 weeks illegal, impose onerous requirements on abortion providers, and demand that all clinics meet costly and burdensome building requirements. If passed, 37 of the state’s 42 abortion providers will be forced to close their doors. This despite the fact that 79 percent of Texans believe abortion should be available to a woman under varying circumstances, while only 16 percent believe abortion should never be permitted.

This is just the latest in a seemingly never-ending assault on Texas women. In 2011, lawmakers decimated the Texas family planning program with a two-thirds budget cut that closed nearly 60 family planning clinics across the state and left almost 150,000 women without care.  Soon after, they also barred Planned Parenthood and other reproductive health clinics defined as “abortion affiliates” from the Women’s Health Program (WHP), a state Medicaid program on which thousands of poor women rely. Governor Perry insisted that former WHP patients could find new providers and claimed there were plenty to bridge the gap, but that simply is not the case. Clinics across Texas have reported a sharp drop in patients, and guess that former WHP clients are receiving no care at all.

To suggest so cavalierly that women simply find new providers is evidence that Republican lawmakers simply don’t understand – or don’t care about – the socioeconomic realities that shape women’s lives. Otherwise, they would recognize the absurdity of forcing women to navigate an increasingly complex health system to find new providers and then traverse hundreds of miles to receive basic care and services. This is a stark illustration of the privilege gap that exists between policymakers and the people they represent. 

After it became clear that the warnings of public health experts – who testified that such policies would impose a heavy economic toll on the state, result in negative health outcomes, and increase the demand for abortion – were becoming reality, lawmakers last month restored family planning funding to the 2014 budget. While this is certainly good news, returning to pre-2011 funding levels still leaves nearly 700,000 women without access to care and so far has enabled only three of the nearly 60 shuttered clinics to re-open. And even before the 2011 budget cuts, only one-third of the state’s 1 million women in need of family planning services received them through the state program. A provider shortage will persist for the foreseeable future; it is no easy task to reopen a clinic once it has shuttered its facility, released its staff, sold all its equipment, and sent its patients files elsewhere. 

If the current legislation were to pass, nearly all the state’s abortion providers would be forced to close. The majority of those are clinics that not only offer abortion services, but also provide contraception, STD testing, and cancer screenings for poor women. Many of those clinics are located in areas that are already bearing the brunt of family planning clinic closures (see map below). The few clinics that would remain open in Texas are located in urban areas, leaving women in rural Texas with even fewer health care options than they currently have. 

(Abortion data: New York Times and Planned Parenthood. Family Planning data: University of Texas Population Research Center)

What are women—especially poor women—to do? Women in Texas already face heavier burdens than women in many other states. Texas has one of the nation’s highest teen birth rates and percentages of women living in poverty. It has a lower percentage of pregnant women receiving prenatal care in their first trimester than any other state. It also has the highest percentage of uninsured children in the nation and provides the lowest monthly benefit for Women, Infant, and Children (WIC) recipients (an average of $26.86 compared to the national average of $41.52). And soon the majority of women may not have access to abortion care at any stage of their pregnancy.

Governor Perry’s policies have marginalized women who already bear the heavy weight of so many inequities. His latest efforts will only marginalize them further.

This anti-abortion legislation will not prevent women from getting abortions. It will simply push them across the border and into unsafe facilities like those operated by Kermit Gosnell. It’s passage will add to the fury that has escalated over the past three years as women have lost access to breast exams, birth control, and abortion services while being told it is for their own good. These lawmakers fail to understand that the full range of reproductive health services, including the ability to access an abortion, is absolutely central to women’s ability to lead happy, healthy, and productive lives – an ability that is itself essential to the strength of families, communities, states, and our nation.

On Monday, Planned Parenthood president Cecile Richards reminded the crowd in Austin of the old adage that you can measure a country by how well it treats its women. The same is true for Texas.  “We settled the prairie. We built this state. We raised our families,” said the ever-feisty daughter of former Texas governor and progressive icon Ann Richards. “We survived hurricanes and tornados, and we will survive the Texas legislature, too.”

Andrea Flynn is a Fellow at the Roosevelt Institute. She researches and writes about access to reproductive health care in the United States and globally.

 

Rick Perry image via Shutterstock.com.

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Will Delaying the Employer Mandate Deny Health Coverage to Workers?

Jul 3, 2013Richard Kirsch

The White House's decision shows sympathy for big employers, but it's not clear whether employees will have to shoulder the cost.

The surprise announcement from the Obama administration that it will delay for one year penalizing employers that do not offer health coverage to their workers is the latest capitulation by the White House to big businesses that want to shirk their responsibility to help pay for health insurance. But the decision leaves huge unanswered questions about whether health coverage for uninsured workers will also be denied.

The White House's decision shows sympathy for big employers, but it's not clear whether employees will have to shoulder the cost.

The surprise announcement from the Obama administration that it will delay for one year penalizing employers that do not offer health coverage to their workers is the latest capitulation by the White House to big businesses that want to shirk their responsibility to help pay for health insurance. But the decision leaves huge unanswered questions about whether health coverage for uninsured workers will also be denied.

Yesterday, the Treasury issued a notice delaying for one year, until 2015, the requirement that employers of more than 50 full-time employees (3 percent of all employers) report on whether they offer health coverage to their employees. The Affordable Care Act requires that these employers pay penalties when they they do not offer qualified coverage or when their workers access coverage through the new health care exchanges. The Treasury’s notice does not change the legal requirement that employers provide coverage, but it effectively negates enforcement of that requirement. The delay comes even though the Treasury has had more than three years to prepare to implement the law and an entire new industry has emerged advising employers on how to comply.

The notice, full of sympathy for employers who have to comply with the reporting requirements, totally ignores the implications for employees. What will happen to workers for companies that do not offer health insurance or that offer coverage that does not meet the law’s minimum requirements? These are huge questions, and it is remarkable that the Obama administration would publish the Treasury Department notice without addressing them.

Under the Affordable Care Act, workers who are offered acceptable coverage at work are not eligible to access health insurance through the new health insurance marketplaces (“exchanges”), which offer income-based subsidies to purchase health coverage. These workers must purchase the employer coverage or pay a fine.

So what happens under the Treasury Department rule if the marketplaces have no way to determine whether a worker has been offered qualified coverage? Would the uninsured worker be able to get subsidized coverage? It would be cruel to make employees, most of whom work for low wages, wait another year to get health insurance because the administration is giving big employers a break on reporting. If the administration is going to give employers a break, it should not do so at the expense of millions of uninsured or underinsured workers who have been looking forward to having health insurance available to them on January 1, 2014.

Another question is whether the penalty for not being insured, the individual mandate, would apply to an uninsured employee of a business that does not have to report on whether it is offering coverage and is avoiding the employer mandate penalty. What greater irony than to fine an employee because the Obama administration is eliminating fines for large employers?

The Obama administration’s decision continues a history, stemming from the business-friendly version of the Affordable Care Act that emerged from Max Baucus’s Senate Finance Committee, of bowing to the demands of big businesses to avoid responsibility for providing affordable coverage to their employees. The Affordable Care Act's only requirement for employers of 50 or more full-time workers is that they offer employers high-deductible plans, which require employees to pay a big chunk of their incomes for the coverage. If employers meet these skimpy provisions, they can avoid paying penalties and their workers are locked into the lousy coverage or required to pay a fine for the privilege of being uninsured. It is not clear how many employers will take this low-road route, but the history of the big low-wage employers – think WalMart and McDonalds – is not encouraging.

What matters now is that the White House treat employees with the same level of concern it has shown big business. To do that, the administration should make it clear that workers who state that they are not offered coverage by their employer, or that the coverage costs more than they can afford or has limited benefits, should be eligible to receive income-based subsidies in the new marketplaces. Simple justice, and the primary goal of the Affordable Care Act of guaranteeing affordable health coverage to all Americans, requires nothing less. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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Daily Digest - July 3: No One Really Needed That Insurance, Right?

Jul 3, 2013Rachel Goldfarb

Click here to receive the Daily Digest via email.

White House Delays Key Element of Health Care Law (AP)

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White House Delays Key Element of Health Care Law (AP)

Ricardo Alonoso-Zalvidar speaks to Roosevelt Institute Senior Fellow Richard Kirsch about the news that the administration is delaying implementation of the employer mandate. Kirsch is outraged about how this will affect employees who expected insurance on January 1, 2014.

Regulators to Beef Up Wall Street Rules…Thanks to Republicans?! (MoJo)

Erica Eichelberger asks Roosevelt Institute Fellow Mike Konczal why two Republicans on the FDIC want to tighten regulations on big banks' capital requirements. Konczal's explanation? They think it will reduce the blame on the FDIC if there is another bailout.

Murky Language Puts Homes Underwater (TAP)

David Dayen explains how banks are utilizing unclear language to make a loophole that allows them to dual-track homeowners, or continue pursuing foreclosure while the homeowner submits paperwork for mortgage modification. Until we fix this, people will continue to lose their homes.

How to Make Sure a Growing U.S. Economy Helps the Poor (Scholars Strategy Network)

Lane Kenworthy argues that the only way to ensure that economic growth helps the poor is to change the structure of the social safety net and tie benefits to growth. Otherwise, we leave swaths of people behind, which doesn't seem particularly American.

Making $7.75 an Hour, and Figuring There’s Little to Lose by Speaking Out (NYT)

Michael Powell talks to fast-food workers who are involved in the unionizing efforts in New York City. These workers have no fears about annoying their employers: what's the risk when you're making so little money to begin with?

Payroll Cards Are Under Scrutiny by New York’s Attorney General (NYT)

Jessica Silver-Greenberg reports that following Monday's story in the Times on payroll cards, the New York attorney general has opened an investigation. Employees must give explicit consent to be paid this way in New York, and why would anyone choose all those fees?

Hawaii Becomes Second State To Pass A Domestic Workers Bill Of Rights (ThinkProgress)

Bryce Covert discusses Hawaii's new law, which was signed on Tuesday and brings housekeepers, nannies and other domestic workers under the protection of labor laws such as the minimum wage, overtime, and anti-discrimination laws.

Oh, Right, the Jobs Crisis (The Nation)

John Nichols still sees the jobs crisis as the primary problem facing the U.S., and one that needs to be solved before many others. He's especially concerned with the groups that are struggling worst: people of color and young people.

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Daily Digest - June 21: Changing Definitions, Unchanging Realities for Workers

Jun 21, 2013Rachel Goldfarb

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Is it Time to Tweak Obamacare? Sen. Joe Donnelly Thinks So. (WaPo)

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Is it Time to Tweak Obamacare? Sen. Joe Donnelly Thinks So. (WaPo)

Sarah Kliff speaks to the Senator, who wants to change the definition of full-time hours in the Affordable Care Act from 30 to 40. He wants to prevent part-time workers from getting their hours cut due to employers who don’t want to offer health insurance.

Who Killed Equality? (Bloomberg)

Ezra Klein says that the usual arguments on economic inequality ignore the power of government to set the rulebook, drawing on the work of Dean Baker. The current set of rules exacerbate income inequality, but they don't have to stay on the books.

The Economy Can’t Recover If the Workers Don’t (Campaign for America's Future)

Robert Borosage is concerned by the Fed's changing tone on the economic crisis and recovery, because as far as most Americans are concerned, we're still in the middle of the crisis. Stock market improvements are not average worker recovery.

Cutting Wages Won’t Create Jobs (The Hill)

Jack Temple argues that when we don't raise the minimum wage, we're effectively cutting it due to inflation, and that isn't helping unemployment. In fact, an increase in the minimum wage would serve as a major stimulus for the economy.

The Unpaid Internship Racket (MSNBC)

Timothy Noah considers the moral failings of unpaid internships, which go alongside their frequent illegality as shown by last week's ruling against Fox Searchlight. Beyond the inequality and abuse, there's the simple formulation that interns are workers, and workers get paid.

Profits Without Production (NYT)

Paul Krugman suggests that the biggest difference between today's economy and the past's is the growth of monopoly rents, or profits tied primarily to market dominance. This depresses perceived return on investments and wages, contributing to our weak recovery.

Bank of America Whistleblowers Allege Rot at the Core of the Mortgage Industrial Complex (HuffPo)

Ray Brescia reports on some of the most serious charges revealed in affidavits filed in litigation against Bank of America. If this is Bank of America's way of reforming its foreclosure practices, then it is clear that more oversight is necessary.

New on Next New Deal

One More Day for Women's Equality in New York

Roosevelt Institute Fellow Andrea Flynn writes on New York Governor Cuomo's Women's Equality Act, which contains one of the most progressive pieces of abortion legislation in the country. But the legislative session ends today, and the State Senate seems unwilling to take a vote on the issue.

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What Will Obamacare Mean for the Low-Wage Work Crisis?

Jun 18, 2013Richard Kirsch

New health insurance marketplaces will make affordable care accessible to millions, but low-wage employees of big businesses may be left out.

One of the biggest issues that the Affordable Care Act (ACA) is meant to tackle is the lack of health coverage among low-wage workers. While there is good news for many low-wage workers in the new law, many others will still find themselves locked out of access to affordable coverage. Solving their concerns will be one more part of the huge challenge of confronting the power of mammoth low-wage employers in the new economy.

New health insurance marketplaces will make affordable care accessible to millions, but low-wage employees of big businesses may be left out.

One of the biggest issues that the Affordable Care Act (ACA) is meant to tackle is the lack of health coverage among low-wage workers. While there is good news for many low-wage workers in the new law, many others will still find themselves locked out of access to affordable coverage. Solving their concerns will be one more part of the huge challenge of confronting the power of mammoth low-wage employers in the new economy.

There has been a lot of coverage about the potential for fast food chains and other employers to cut the hours of some of their employees to under 30 a week in order to avoid having to offer them health coverage. To the extent that employers do cut back hours, it will accelerate a long-trend toward part-time low wage work; part-timers increased from 17 percent to 22 percent of the workforce just from 2007 to 2011.

The surge in part-time work is one aspect of the broader increase in low-wage work. Most of the jobs coming out of the recession are low-wage, which has hastened a trend going back 30 years of a growing number of low-wage jobs with no health benefits. The powerful eroding of good jobs is the greatest threat to broadly-shared economic prosperity. It destroys any promise of people living a middle-class life style, creates a two-tiered society, and undercuts the consumer buying power needed to move the economy forward.

The low-wage economy means more than just low wages. Post-World War II jobs, which came with employer-provided health coverage and a pension, are fast disappearing. Now more than four-in-ten workers do not get health coverage on the job. This includes many employees of small businesses, which do not offer any health coverage. It also includes millions of employees of large businesses, who either are not offered health coverage or can't afford the premiums.

Enter Obamacare. The good news in the ACA for low-wage workers who work for small employers (those with fewer than 50 full-time workers) is that many will have access to affordable health coverage for the first time through the new health insurance marketplaces. They will be able to sign up for subsidies that limit how much they pay in premiums to a percentage of their income and get plans with good benefits and moderate out-of-pocket costs. Those with incomes below 133 percent of the federal poverty level (about $15,000 for an individual) will be eligible for Medicaid in states that agree to expand coverage.

But for those who work for bigger employers – and some two-thirds of minimum wage jobs are at employers of 100 or more – it is not clear whether the ACA will deliver on its promise of affordable coverage. Ironically, part-time workers may come out ahead, with a much better chance of affordable coverage, while full-time low-wage workers may find coverage out of their financial reach.

Millions of people who don’t work more than 29 hours a week for any one employer will be eligible for affordable subsidized coverage through the new marketplaces. And even if employers trim back some workers' hours to get below the 30-hour mark, those workers may end up better financially and gain affordable coverage for the first time.

There will also be some employers who increase the hours of part-time workers to above 30 a week, as the Cumberland Farms stores, which employ 4,500 full-time workers and 2,700 part-timers, plan to do. Noting that  full-time workers stay with the business three to four times longer than part-timers, the Cumberland Farms CEO explains, ““Longer-tenured workers deliver a better experience for the customer.” According to the payroll-processing firm ADP, other businesses are also likely to encourage more workers to become eligible for employer coverage.

But it is not at all clear that full-time low wage workers for bigger employers will be able to get affordable coverage. That is because the big business lobby exercised its muscle in shaping the ACA in the Senate Finance Committee. All the law requires is that employers offer individual employee health coverage that does not cost more than 9.5 percent of an employee’s income in order for the business to escape paying a $2,000-to-$3,000 penalty. In addition, the ACA allows employers to offer plans with very high out-of-pocket costs.

Make no mistake about it; 9.5 percent of wages is a lot for anyone to pay for health insurance, and it is a huge amount for low-wage workers. By comparison, an employee who makes $12 an hour and works a 35-hour week would pay about 6 percent of his or her income on health insurance in the new marketplaces, for coverage which is almost certain to have better benefits and lower deductibles and co-payments.

And here’s the kicker: as long as a worker is offered the less-than-9.5-percent-of-income coverage at work, that worker is not eligible for the much better coverage in the marketplace. And if the worker decides that she can’t afford the premiums, she will be have to pay a penalty for not being insured.

The big outstanding question is, what will the bigger low-wage employers do? They could choose to offer affordable coverage to their employees. But the big fast food chains, retail giants, and box stores have a history of offering several levels of coverage to their employees, including bare-bones plans targeted at their lowest paid workers.  

Putting this all together, here is what health coverage for low-wage workers may look like after a couple of years of implementation of Obamacare: good coverage for those who work for smaller businesses and who don’t work more than 29 hours a week for any one employer, but either no coverage or coverage that is costly to buy and to use for many people who work more than 30 hours a week for the biggest low-wage employers in the country.

Seen in this light, Obamacare is one more step toward both improving and exacerbating the low-wage work crisis in the nation. The movement away from employer-provided health coverage is a huge step forward in creating a more just health care coverage system. But justice for low-wage workers at big businesses will mean confronting the power of companies like WalMart, McDonald's, and Bank of America (with its low-wage tellers). This is the same challenge we face in taking the other steps needed to modernize labor standards for the 21st Century: a higher minimum wage indexed to inflation, paid sick days and family leave, and overhauling labor laws so that workers’ rights to form unions is restored. It is fast becoming central to the fight for a new economy that works for all Americans.

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

 

Health care reform advocates image via Shutterstock.com

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The Next Big Obamacare Battle: The Low-Wage Workers Who Get Left Out

Apr 1, 2013Richard Kirsch

Reformers should start building a coalition to push for expanding the bill and making it more affordable.

Reformers should start building a coalition to push for expanding the bill and making it more affordable.

The whining from some fast food chains that they won’t be able to afford paying for their employee’s health coverage under Obamacare have gotten a lot of press. But what is more troubling is the recent news that some big chains are concluding that the costs won’t be nearly as high as they had projected. The reason: their employees won’t be able to afford the health insurance and will instead pay a fine and remain uninsured. This fight is just the first battle in the coming war over Obamacare that will center around those who get left out. Big flaws in the bill will mean that many low-wage workers will be forced to choose between paying huge chunks of their income on premiums or on a penalty that leaves them with no coverage at all. Reformers should take note and get ready for the coming struggle.

Last week, the Wall Street Journal reported that Wendy’s lowered its estimate of the cost of Obamacare for each of its restaurants by 80 percent, from $25,000 a store to $5,000. The hamburger chain figured that many of its full-time employees, who will be offered health insurance through the company, will turn down the coverage because, as the Journal reported, “they can get insurance through Medicaid or a family member, or because they prefer to pay the penalty for not having coverage.” That penalty starts at $95 a year, although it will go up to $695 by 2016.

Wendy’s isn’t alone. Several other fast food chains have come up with similar estimates. One example is Popeyes, which figures that since only 5 percent of its employees have signed up for the high deductible plan now offered at a price of only $2.50 a week, few workers will choose to pay an estimated $25 a week for the improved coverage it will offer under Obamacare. While the new coverage required under the law will be far superior to the plan Popeyes now offers, with a good list of benefits, it will still include a steep deductible, particularly for a low-wage worker.

The debate over fast food chains and their workers is revealing one of the biggest flaws in the Affordable Care Act. Many low-wage workers will be put in a very difficult position: pay a big chunk of their limited wages for health insurance that is costly to use, or pay a fine for the privilege of remaining uninsured. This is an example of how the debate around Obamacare is about to take a huge turn. Instead of partisan opponents fearmongering about the theoretical impact of the law, the new struggle will be around the actual experience of those Americans whom the law was written to protect: people who are uninsured because they can not afford coverage or are locked out of the system because they have a pre-existing health condition.

Come January 2014, millions of people will get affordable health coverage for the first time. These will mostly be working people who do not get insurance on the job now but will become newly eligible for Medicaid or income-based tax-credits to buy insurance in the new health insurance marketplaces (“exchanges”). This will also include those who will no longer be turned down because of a pre-existing condition. The expansion of Medicaid – in states that give that the green light – and the income-based subsidies will create a huge new constituency for Obamacare that will oppose any attempts to roll back the law.

But due to problems written into the Affordable Care Act, the news won’t all be good for many people who can’t get affordable coverage now. There are some for whom the coverage in the marketplaces will still be too costly because the subsidies are too stingy. For example, a single person who earns just $33,500 will be required to pay $258 a month in premiums, which is more than 9 percent of his or her gross income, for coverage. That’s a big chunk out of a moderate income and is more than twice as much as that person would pay under Massachusetts’s current, successful law. In fact, people who earn more than two times the federal poverty level would be required to pay premiums from 6.3 percent to 9.5 percent of their incomes. If those costs are out of their financial reach, the bleak alternative is to pay a fine for remaining uninsured. It’s true that the coverage will include good benefits, free preventive services, and a cap on out-of-pocket costs. But unless it is already paying high medical bills, that won’t help a working family pay a high premium. The millions who face this dilemma will not be happy to have to make the choice between premiums that will put a big squeeze on an already tight budget or paying a fine they can’t afford for no benefits at all.

Which brings us to the second big group of people who will face this dilemma: low-wage workers who work more than 30 hours a week for a business that has 50 or more full-time employees. These employers can require employees to pay up to 9.5 percent of their incomes as premiums. The premiums are likely to be less for individuals; Popeyes estimates $1,200 a year, which would be similar to what has been found workable in Massachusetts. However, unlike in Massachusetts, the minimum coverage will have very high out-of-pocket costs, so workers will face high premiums for coverage that they can’t afford to use (although preventive care will be free). Furthermore, employers could decide to put more of the costs on to their workers, forcing them to choose between the premium and fines.

The news is much worse for family coverage. The IRS ruled earlier this year that the 9.5 percent rule will apply to the cost of individual coverage, even if family coverage costs much more than this. Here is how the New York Times editorial board explained the impact, in an editorial titled, “A Cruel Blow to American Families”:

A Kaiser Family Foundation survey found that in 2012, employees’ annual share of insurance premiums averaged $951 for individual coverage and $4,316 for family coverage. Under the I.R.S. rule, such costs would be considered affordable for an employee with a household income of $35,000 a year — making the employee’s spouse and children ineligible for a public subsidy on a health exchange, even though that family would have to spend 12 percent of its income for the employer’s family plan.

The Times goes on to report that between 2 million and 3.9 million spouses and children could lose access to affordable coverage because of the ruling. Those are millions of people for whom the law will be an empty promise.

The major purpose of the Affordable Care Act was to make decent health coverage affordable to Americans, and the law’s success will depend on how well it does just that. Next year, many millions of now uninsured people will gain access, but there will be millions of others for whom the promise remains out of reach. In the toxic political atmosphere surrounding Obamacare, the people left out will take center stage.

Republicans will seize on this situation to argue that the law is not working and use these people’s frustrations to portray the law as an expensive failure. The task for the champions of the ACA will be to unite those who are benefiting under Obamacare with those who will only benefit if the law is made more affordable. And since making coverage more affordable will take the government and, ideally, employers paying for more of the premiums, enacting the fixes will require a big political lift, particularly in the current Congress. Meeting this challenge will require organizing the winners and the losers to push for strengthening the law together.

All of this will become an issue in the 2014 and 2016 elections. In this way, Obamacare will join Medicare, Social Security, and Medicaid as perennial issues of public debate, with competing visions of the role of government in assuring the security and well-being of our citizens. It’s a fight that never ends. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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Paul Ryan’s Budget Would Kill Health Insurance Programs – and Thousands of Americans

Mar 14, 2013Richard Kirsch

Ryan's budget priorities expose a disregard for the fundamental right to a healthy life.

I know you are not supposed to write in hyperbole, but sometimes the truth needs to be told. Paul Ryan’s budget, which kills Obamacare and cripples Medicare and Medicaid, would kill tens of thousands of people. Every year.

Ryan's budget priorities expose a disregard for the fundamental right to a healthy life.

I know you are not supposed to write in hyperbole, but sometimes the truth needs to be told. Paul Ryan’s budget, which kills Obamacare and cripples Medicare and Medicaid, would kill tens of thousands of people. Every year.

I have trouble with putting policy glosses on proposals that would deny health care coverage to millions of people and make care much more expensive to millions more. Because when more people lack health coverage, more people die. And when health costs prevent people from getting the care they need, they get more seriously ill.

How many people are we talking about? Estimates of the number of people who will die because they are uninsured vary, from about 500 to 1,000 for every one million who lack coverage. Repealing Obamacare would block promised coverage for 32 million people, so that would mean somewhere from 16,000 to 32,000 each year who will die prematurely. Of course, since some Republican governors and legislatures are not implementing the expansion of Medicaid coverage in their states, some of those deaths are already on their hands.

Which leads us to the Ryan plan for slashing Medicaid. He replaces a program that now entitles low-income people to health coverage with a block grant to states to spend however they want on health care for the poor. The federal government would save money by decreasing what it pays to state governments and states would get to do the dirty work of cutting people’s health care. That will mean fewer people on the program, higher out-of-pocket costs, or a reduction in coverage of medically necessary care. And more people dying who would have lived if they had kept their previous health coverage.

In cutting Medicaid, Ryan is fulfilling the biggest concern that Republican governors say they have when they consider expanding Medicaid under Obamacare. A typical remark came from Arizona Governor Jan Brewer: “As I weighed this decision, I was troubled by the possibility that a future President and Congress may take steps to reduce federal matching rates, leaving states with a greater and greater share of health costs over time.”

Everyone is familiar by now with Ryan’s proposal to replace Medicare with vouchers to buy private insurance. The Ryan voucher plan is not about controlling health care costs; instead, it is intended to shift costs from the federal government to the seniors and the disabled who are covered by Medicare. When people can’t afford the care they need – and the CBO reported that the first Ryan voucher plan would have doubled the already high cost of health care to seniors – they will get sicker.

The parts of Obamacare that Ryan doesn’t repeal underscore his cynicism. Ryan would keep the $716 billion in Medicare spending reductions over a decade, which he railed against when he was running for vice president. In his debate with Joe Biden, Ryan called the Medicare changes a “piggybank” for Obamacare, which would cause hospitals and nursing homes to close and lead to seniors losing benefits. None of this is true, as Biden pointed out. So now Ryan is using that $716 billion in savings to help him reach his goal of balancing the federal budget instead of what those savings were intended for: increasing Medicare benefits under Obamacare and expanding coverage to millions of Americans.

Remarkably, Ryan also keeps the other tax increases in Obamacare, some $1 trillion raised mostly from upper income taxpayers and various medical providers and insurers. Ryan is using money raised to provide life-saving health coverage to millions of people, taxes he and other Republicans railed against, to meet his fantasy target of balancing the budget in 10 years.

I’ve grown tired of providing a veneer of respectability to people in power – people with good health insurance, coverage that provides them with access to the best medical care, and pays most of their bills – who deny their constituents a basic human right. Governors and state legislatures who won’t expand Medicaid even though the federal government will pay virtually all of the cost. Members of Congress whose health coverage is largely paid for by their constituents who still make political hay by demagoging against Obamacare.

Fortunately for those whose lives are at risk, the Ryan budget is dead on arrival. But the debate about how to make the promise of Obamacare real is only just the beginning. States will continue to debate whether to expand Medicaid. And when Obamacare’s major provisions kick-in next January, there will be a new round of debates about whether families can afford the new coverage and whether employers and government should do more or less to assure that people get covered. What will not end is the real consequences in each of those decisions for people’s lives. 

Richard Kirsch is a Senior Fellow at the Roosevelt Institute, a Senior Adviser to USAction, and the author of Fighting for Our Health. He was National Campaign Manager of Health Care for America Now during the legislative battle to pass reform.

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