President Obama's signature health law is called the Affordable Care Act. In an ironic twist, though, it may prove prohibitively expensive for many low-income Americans.
The stated goal, of course, is to expand coverage, which the government enforces through certain mandates. To avoid fines, employers who have 50 or more full-time employees must offer coverage that meets certain minimum requirements. That coverage has to cost no more than 9.5 percent of an employee's income.
Run the numbers, as the Associated Press recently did. A worker making $21,000 annually could have to fork over up to $1,995 in premiums under the 9.5 percent figure, almost twice the current average. This is "affordable"?
That's a lot to ask young, healthy workers to pay. As Shannon Demaree, head of actuarial services for the Lockton Benefit Group, points out: "What the government is requiring employers to do isn't really something their low-paid employees want."
This isn't what Americans were promised. "Let's make sure that everybody who is out there working hard and doing the right thing, that they're not going to go bankrupt because they get sick, that they're going to have health care they can count on," Mr. Obama stated at a campaign stop last summer. "And we got that done."
Are you sure about that? "Obamacare may cost more than experts previously thought," CBS News recently reported, citing a new survey of 900 employers.
A higher price tag is not the only unintended consequence of Obamacare. It is likely to lead employers drop employees into Medicaid or the subsidized health exchanges.
Dumping employees may be the easiest and cheapest option for some employers looking to dodge the complexity of Obamacare and the climate of uncertainty that it creates. Just deposit everyone onto the government, and wash your hands of the whole mess.
Small wonder that nearly one-quarter of small businesses say they're likely to stop offering coverage in the next five years. Get out of the game altogether, they reason. Leave it to government. But Medicaid already shows the problems with leaving it to government. More and more doctors, stung by low reimbursement rates, are refusing to take patients from the program anymore.
Medicaid and the exchange subsidies are the most expensive parts of Obamacare. The country is already struggling to pay its current bills, yet we're going to add more bills?
Another unintended consequence of the law: It's pushing employers to cut hours for their workers. Why? Because employers can avoid penalties by moving workers to part-time jobs. So instead of adding more full-time employees, employers are going in the opposite direction. That's hardly a strong signal to an economy that is still in a fragile recovery.
How concerned is the administration? "There has been a lot of conjecture about what people might do or could do, but this hasn't actually happened yet," White House senior communications adviser Tara McGuinness said. "The gap between sky-is-falling predictions about the health law and what is happening is very wide."
To the contrary, employers both private and public have already been taking a hard look at the law — and planning accordingly. "It'll likely affect the number of people we can hire," Five Guys owner John Rigos said earlier this year. "It'll probably have to reduce the staff to some degree, and again, focus on building smaller, stronger teams, rather than being as aggressive in opening up new stores and creating new jobs." Multiply that across an economy, and you've got trouble.
"We have to pass the bill so that you can find out what is in it," House Minority Leader Nancy Pelosi once said of Obamacare. It's proving to be quite an alarming process of discovery.
Ed Feulner is founder of the Heritage Foundation (heritage.org).
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