Tag Archives: obamacare

The Unfortunate 14

North Carolina is one of 14 states that has opted out of the new Medicaid funds linked to Obamacare. What does that mean? According to a new Rand Corporation study it means those states are sailing into a stiff healthcare wind:

The study, by the Rand corporation, looks at the 14 states that have said they will opt out of the new Medicaid funds. It finds that the result will be they get $8.4 billion less in federal funding, have to spend an extra $1 billion in uncompensated care, and end up with about 3.6 million fewer insured residents.

So then, the math works out like this: States rejecting the expansion will spend much more, get much, much less, and leave millions of their residents uninsured. That’s a lot of self-inflicted pain to make a political point.

It’s a truism of health-care politics that the uninsured are impossible to organize. But Obamacare creates an extraordinarily unusual situation. The Affordable Care Act will implemented in states that reject Medicaid. There will be huge mobilization efforts in those states, too, as well as lots of press coverage of the new law. The campaign to tell people making between 133 and 400 percent of poverty that they can get some help buying insurance will catch quite a few people making less than that in its net. And then those people will be told that they would get health insurance entirely for free but for an act of their governor and/or state legislature.

North Carolina is already seeing political activism spearheaded by the state's NAACP chapter against policies of the Republican legislature. Just yesterday the NAACP's ongoing "Moral Monday" campaign led to more than 150 arrests at the state capitol. Quite frankly that action is easy for a lot of people to dismiss as just more of the same from a group trying to justify its existence (when doesn't the NAACP protest?), but if people who normally sit on the sidelines are suddenly spurred to action because their government denied them the opportunity for cheaper (or free!) health coverage then things could get very interesting for the next election cycle here in the Tarheel state.

(h/t to Fec for the link to the story).

Will Obamacare Lead to a Part Time Nation?

Darden Restaurants, parent company of restaurants like Olive Garden and Red Lobster, is experimenting with limiting the hours worked by some of its employees to see if it can avoid provisions of the Affordable Care Act (ACA) – a.k.a. Obamacare – that go into effect in 2014:

Analysts say many other companies, including the White Castle hamburger chain, are considering employing fewer full-timers because of key features of the Affordable Care Act scheduled to go into effect in 2014. Under that law, large companies must provide affordable health insurance to employees working an average of at least 30 hours per week.

If they do not, the companies can face fines of up to $3,000 for each employee who then turns to an exchange — an online marketplace — for insurance.

"I think a lot of those employers, especially restaurants, are just going to ensure nobody gets scheduled more than 30 hours a week," said Matthew Snook, partner with human-resources consulting company Mercer.

Darden said its goal at the test restaurants is to keep employees at 28 hours a week.

Analysts said limiting hours could pose new challenges, including higher turnover and less-qualified workers.

It would seem logical that employers would limit employees to part time status whenever possible in order to avoid fines for not providing health insurance, but on the other hand employers already spend much more than $3,000 per full time employee on health insurance – $10,522, of which the employees paid $2,204, according to the Society of Human Resource Management – so it would seem even more logical for them to stop providing health insurance altogether and lower their expenses by over 50% overnight. 

Here are some other questions:

  • How many companies, in industries that have not historically had high levels of part time employees, will start turning jobs that had been done by one full time employee into multiple positions filled by part timers? 
  • Are there provisions in the ACA that would prevent that?

 

Unintended Consequences

Most of us are familiar with the law of unintended consequences (for those of you who aren't, prohibition would be a good place to start your research) and this post at Tax.com has me wondering if all those folks fighting Obamacare in the courts might have considered the unintended consequences if they win:

The only difference between the mandate and your common tax incentive is that Congress framed the incentive as a tax penalty instead of a tax break. I recognize there might be a legal difference between the two approaches that is beyond my comprehension. But the Court, Congress, and the public should understand that economically the two approaches are exactly the same…

A tax penalty and a tax incentive have the same economic impact on affected and unaffected individuals. They have the same effect on the goals the government is trying to achieve. They have the same effect on government revenues. It is possible, then, that they have the same effect on freedom and constitutional principles.

So armchair constitutional scholars should enjoy the show. But please excuse us economists if we tune out. Perhaps too blithely, we assume the mandate will be affirmed because the nation's leading legal gurus won't want to open up a can of worms that makes all tax incentives subject to constitutional challenge. If by chance the court does strike down the mandate, by all means give us a call. It could be the beginning of the end for all those complex and inefficient tax incentives we have been complaining about all these years.

So a question for you legal scholars out there: if the Supreme Court strikes down Obamacare is my wonderful deduction for mortgage interest soon to follow?