Two House Committees Convene Hearings on Impacts of the ACA Employer Mandate
Statements and testimony cite employers reducing hours to avoid penalties
April 15, 2015 12:00 PM
Two U.S. House Subcommittees—the Ways & Means Health Subcommittee and the Education & the Workforce Subcommittee on Health, Employment, Labor, and Pensions—convened hearings today that focused on the impact of the employer mandate included in the Affordable Care Act (ACA). The hearings received testimony from business owners, think tanks, and trade associations about the negative consequences of the mandate on both employers and employees, as well as other aspects of the ACA.
In his opening statement, House Subcommittee on Health, Employment, Labor, and Pensions Chairman David P. Roe (R-TN) gave specific example of employers that have reduced hours or altered staffing in order to avoid penalties under the employer mandate.
“More than 450 employers have publicly stated they are cutting hours or making other staffing changes to avoid the law’s punitive mandates, including the University of Colorado in Colorado Springs, Trig’s Supermarkets and Coach’s Fast Food in Wisconsin, Shari’s restaurants in Oregon, and the Henrico County School District – as well as other school districts – across the Commonwealth of Virginia,” Chairman Roe stated.
Roe explained that the employer mandate has negative consequences not only for employers but also workers. “The Congressional Budget Office estimates the law will result in two million fewer full-time workers. Many of these difficult changes are taking place in the service industry, which means lower-wage workers are bearing the brunt of the ObamaCare burden. Schools are also cutting hours, undermining the quality of education America’s students deserve. We’ve heard time and again from the administration that these are mere anecdotes or, in the words of then-Secretary Sebelius, ‘speculation.’ Yet even those who supported the health care law have no choice but to recognize its harmful consequences.”
House Ways & Means Health Subcommittee Chairman Kevin Brady (R-TX) recounted stories from business owners about the impact of the mandate. “I have a local restaurateur who has instructed his four store managers they will never again hire a full time worker,” Brady said. “He has been advised by his accountants that he would—because of the ACA—would actually be more profitable by closing three of the stores and going with one, which is exactly what he doesn’t want to do. He wants to have a pizza small business in Willis, TX, and would like to expand to two neighboring communities. But primarily because of this, he can’t afford to do so.”
In a sign of bipartisan support for addressing some of the issues with the employer mandate, Congressman Jim McDermott (D-WA), who has been critical of efforts to repeal the ACA, indicated willingness to consider legislation that would ease the reporting requirements on employers for offering coverage to workers.
The testimony and statements during the hearing reflect concerns expressed by the National Association for Home Care & Hospice (NAHC) that many home care agencies will be unable to provide health insurance or unable to pay the ACA penalties. As a result, home care agencies will be forced to cut their employees’ hours to less than 30 in order to avoid the health insurance requirement. In its 2015 Legislative Blueprint for Action, NAHC recommends Congress should: modify the employer responsibilities in the ACA to address home care specific needs; exempt home care providers from the employer responsibilities; fund the cost of health insurance for full time workers; help the states ensure that low wage home care workers have health insurance through Medicaid or otherwise; provide subsidies or tax credits to cover the increased cost of care as a result of the employer mandate. Consumers of private duty care should not need to pay higher rates of care.
Another proposal that NAHC strongly supports would amend the definition of full-time work from 30 hours or more per week to 40 hours or more per week. The House passed this legislation earlier this year in January, and similar legislation has been introduced in the Senate. The ACA imposes penalties on employers with more than 50 full-time equivalent employees that do not provide health insurance for “full-time” workers, which it defines as those working just 30 hours or more a week.
NAHC plans to submit statements for the record for both Committee hearings. NAHC has also received information that Congress intends to hold more hearings on the employer mandate, and NAHC will continue to address home care and hospice specific needs with regards to the ACA’s employer requirements.
NAHC conducted a survey in December 2014 that found the employer mandate would negatively impact home care and hospice agencies. The results found it would weaken patient access to care, reduce wages and working hours of home care staff, and force home care companies to restructure their operations to rely on part-time caregivers. Here are the results of the study:
82.54% of home care and hospice companies do not provide health insurance to all of their employees because of reliance on government program payments and service to individuals with limited incomes.
46.2% of those companies face a financial penalty under the employer mandate ranging as high as $4.5 million.
73.3% of the companies would reduce the working hours of employees to under 30 per week in order to avoid the cost of health insurance or financial penalties that they cannot afford.
22.16% of the businesses expect to close because of the financial penalties.
83.2% of the companies expect that access to home care in their community would be reduced with fewer providers of care, more restrictive patient admission criteria to fit a part-time workforce, and restrictions on service areas.
88.46% expect that access to Medicaid home care will no longer be sufficient to meet client’s needs.
While the House has already passed a bill changing the full-time definition in the employer mandate, the Senate has not yet passed the legislation. Senate leaders have indicated they will bring the bill to a vote if there are enough votes to pass it. Please contact your Senators using NAHC’s Legislative Action Center to cosponsor legislation defining 40 hours as full-time.