Obama Care Employer Mandate
The Affordable Care Act (Obama Care) was signed by our current president Barak Obama on March 23, 2010. Obama care was enacted with the goals of increasing the quality and affordability of health insurance, lowering the uninsured rate by expanding public and private insurance coverage, and reducing the costs of healthcare for individuals and the government. The Obama Care employer mandate is a requirement that all businesses with over 50 full-time equivalent (FTE) employees provide health insurance for their full-time employees, or pay a per month “Employer Shared Responsibility Payment” on their federal tax return. Why are so many employers against Obama care?
The employer mandate is a penalty that will be incurred by employers with more than 50 employees that do not offer health insurance to their full-time workers. “This provision was included as a disincentive for employers considering dropping their current insurance plans once the insurance exchanges began operating as an alternative source of insurance” (Cohn). The intent of the employer mandate is to help ensure that existing employer-sponsored insurance plans that people like will stay in place. More than half of all Americans have health coverage through an employer, including nearly two-thirds of the adult workers who are too young to qualify for Medicare. In total 6 million people are estimated to gain insurance through employer based health insurance due to the mandate.
What about companies not hiring 50 full time employees and just part time employees because of the employer mandate? As no company with fewer than 50 full-time employees will face this penalty, many are concerned that the employer mandate creates a perverse incentive for business to employ people part time instead of full time. “Thousands of part time state workers (in VA)… are being told they’ll be allowed to work no more than 29 hours a week”(Sizemore), the reason being is that that workers working more than 30 hours are required to receive health care benefits. This will act not only as a ceiling on employment for small businesses, but it also will put a brake on successful business expansion and resulting economic growth. It will make no financial sense for companies to hire more than 49 full-time employees unless they can hire another 50-plus at once. Part-time workers seeking full-time jobs must work two part-time jobs to make up the hours needed for full time employment. And they still will not have employer-provided insurance. The raised marginal cost of the fiftieth worker for businesses could limit company’s growth. Although only less than a fraction of a percent of firms in the US have over 50 full time employees, yet don’t provide health insurance, many Americans are finding their hours cut. The point of the law isn’t for small businesses to find loopholes, the point is to hold larger firms accountable for employee healthcare.
One of the bigger reasons for the employer mandate is that some of America’s biggest employers, Walmart for example, don’t provide full time workers with insurance. This is also why the employer mandate is such a hot issue. With huge companies like these there is a lot of money to throw around considering the amount of profit at stake. “Businesses currently employing more than 50 uninsured employees will see their per employee costs increase $5,000 to $10,000. A business with 51 employees could have an insurance bill of $500,000. For all but the largest corporations, it will be cheaper and make more financial sense to pay the fine and not insure any of its employees.”(Williams 1) whether they offer insurance or pay the fine, the higher balance will be financed out of profits. Creating a couple outcomes. One could be higher…