ObamaCare: Confusion and consequences

As the implementation of ObamaCare gets closer there is more and more confusion about the economic consequences of the law.  Businesses, workers, unions and taxpayers are trying to figure out how their decisions will affect their lives and the lives of others as the October 1 start date approaches.  How will decisions by others affect me?  Will I benefit from the law more than I suffer from it?  Who will suffer the most economic damage due to the law?

Nothing is causing more speculation and hurting jobs growth more than the requirement that most businesses must provide health care for full time employees, defined as 30 hours or more per week, or pay a fine.  Many in the retail, restaurant, non-profit and other lower paying industries (and the workers in those industries) are lobbying the Obama Administration to change the definition of full time back to the 40 hours per week standard and speculation is rampant that many of these businesses will reduce employee hours to 29 hours per week to avoid the health care requirement.

California Legislators are, of course, proposing a solution.

Assembly Bill 880 will impose State fines of $6,000 to $15,000 on top of Federal fines for not providing health insurance coverage to full time employees. It will also punish employers for reducing their employees' hours to less than thirty per week. It seems the Legislature cannot stop themselves from pushing businesses out of California.

Who will benefit and who will be punished with the intended and unintended consequences of this rushed, unnecessary bill?  Are they protecting the workers of the state or are they concerned about the financial burden a giant wave of part-time employees signing up for an expanded government funded Medi-Cal will have on the State? 

According to University of Chicago economist Casey Mulligan, they should be concerned for the State and Federal budgets.  He has calculated that workers in low paying industries, such as the retail and restaurant industries, may be better off working part-time and getting federal subsidies or state Med-Cal, rather than working full time.  His numbers show that many lower paid workers will net more income working part time and receiving government subsidies, than working full time with no subsidies.  And workers would have fewer expenses associated with going to work full time.

Taxpayers, of course, will bear the burden of this solution, funding up to $12,000+ per employee in this new employment paradigm.

How do unions fare in this new world? 

Twenty million people--workers, retirees and dependents-- receive their health care through union affiliated multi-employers trusts.  Unions are demanding that these workers and their families, excluded from the new health exchanges, be subsidized by the Federal government.   The Teamsters, carpenters, roofers, retail workers, janitors, etc. are dependent on union negotiated health benefits for health care, but in this new world will receive no subsidies or tax credits. 

And small non-union employers (less than 50 employees) will enjoy a competitive advantage of a 50% tax credit reimbursing them for the cost of health insurance while similar companies providing health insurance through union trusts plans will not.  Things go from bad to worse for unions in 2018 when the government will levy a 40% excise tax on so-called “Cadillac” health plans, plans often negotiated in labor contracts.

At this point many unions are demanding the Obama Administration subsidize their union plans or repeal the entire law.

So the final question is not who will suffer and who will benefit from ObamaCare, but why are we implementing a law affecting one-seventh of our economy without knowing these answers?

On March 9, 2010, Nancy Pelosi admonished the public when she told reporters “we have to pass this bill so you can find out what is in it”.

 Three years later we still don’t know what is in the bill and what the consequences will be.