Health-care law is tied to new caps on work hours for part-timers
For Kevin Pace, the president’s health-care law could have meant better health insurance. Instead, it produced a pay cut.
Like many of his colleagues, the adjunct music professor at Northern Virginia Community College had managed to assemble a hefty course load despite his official status as a part-time employee. But his employer, the state, slashed his hours this spring to avoid a Jan. 1 requirement that all full-time workers for large employers be offered health insurance. The law defines “full time” as 30 hours a week or more.
“We work so hard for so little pay,” he said. “You would think they would want to make an investment in society, pay the teachers back and give us health care.”
This month, the Obama administration delayed the employer insurance requirement until January 2015. But Virginia, like some other employers around the country that capped part-timers’ hours in anticipation of the initial deadline, has no plans to abandon its new 29-hour-a-week limit.
The impact on Pace and thousands of other workers in Virginia is an unintended consequence of the health law, which, as the most sweeping new social program in decades, is beginning to reshape aspects of American life.
Under the law, companies with 50 or more workers will be required to provide health insurance to all their full-time employees or face significant fines.
The decision to delay that requirement was welcomed by business groups, which said companies needed more time to adapt to the law. But the delay has emboldened the law’s critics, who say it is evidence that the statute is ill-conceived and should be repealed.
A new Washington Post-ABC News poll finds that the country, which remains deeply divided about the law, is similarly split about the delay in the employer requirement. Fifty-one percent say they support the delay, while 45 percent say they do not. The public is also divided over whether the setback means the law is fatally flawed.
The poll, taken at a time of heightened criticism of the law, also finds that support has weakened among Democrats since last year. Just under six in 10 Democrats say they support the law, the lowest point for Post-ABC surveys since the law was passed in 2010.
When the law was written, advocates hoped the employer requirement would help reduce the ranks of the uninsured. Some employers have said they would offer insurance to additional workers, but others have gone in the opposite direction.
Virginia’s situation provides a good lens on why. The state has more than 37,000 part-time, hourly wage employees, with as many as 10,000 working more than 30 hours a week. Offering coverage to those workers, who include nurses, park rangers and adjunct professors, would have been prohibitively expensive, state officials said, costing as much as $110 million annually.
“It was all about the money,” said Sara Redding Wilson, director of Virginia’s Department of Human Resource Management. “If we could cover everyone, we would.”
It is unclear how many companies have cut staffing hours this year in anticipation of the law. Mercer, a human-relations-consulting firm that regularly queries public and private entities, found that 12 percent of employers in a survey last year planned to cut staff hours to avoid a jump in costs under the new rules.
However, the numbers are higher for the retail and hospitality industries, as well as for governments, because those employers often rely on a large number of part-timers but do not offer them benefits, the firm said.
Obama administration officials say there is no evidence that large numbers of businesses are cutting their workers’ hours this year. Rather, they say, Bureau of Labor Statistics numbers suggest that full-time hiring has grown despite the employer mandate.
“We are seeing no systematic evidence that the Affordable Care Act is having an adverse impact on job growth or the number of hours employees are working,” said Alan Krueger, chairman of the White House Council of Economic Advisers, adding that “the law is helping make health-insurance coverage more affordable.”
While a number of private businesses cut worker hours this year because of the health-care law, they have been loath to do it because of fears of public blowback, said Jared Pope, a Texas consultant whose clients include local governments and businesses. Governments have been more open because they must make their decisions publicly, he said.
He estimated that seven of his 62 clients had capped hours and that 18 were considering it. Those that curbed part-time hours are not likely to reverse course, only to have to reinstate the limit next year, he said.
“They kind of somewhat [ticked] people off already,” he said. “They don’t want to undo it and become a good guy now, only to do it all over again to be the bad guy.”
At a Capitol Hill hearing on the employer mandate Tuesday, Jamie T. Richardson, vice president of White Castle System, the Columbus, Ohio-based burger chain, said complying with the 30-hour rule would mean a 35 percent increase in the company’s health-care costs. He said White Castle would probably adopt a policy ensuring that new hires work no more than 25 hours a week if the mandate goes forward as expected in 2015.
Part of the issue for employers lies in the definition of “full time,” which diverges from the industry standard of 40 hours a week. Advocates say the 30-hour bar was supposed to discourage employers from shaving a few minutes off a full-time worker’s hours to skirt the law. But it turns out that “an awful lot of people work less than 40 hours a week,” said Timothy Jost, a health-policy expert and consumer advocate.
Now, business groups and unions are urging Congress to change the rule to define full time as 40 hours, but they face long odds given both parties’ reluctance to tinker with the law.
Maryland and the District offer health insurance to workers who log 20 or more hours a week. But some Democratic-leaning communities, including Dearborn, Mich., and Long Beach, Calif., have imposed caps on part-time workers to keep them below the 30-hour threshold.
Officials in Utah’s Granite School District, which includes about 70,000 students in the Salt Lake City area, said their new policy limiting part-timers to 29 hours a week affected about 1,200 workers. Extending benefits to all of them would have cost the district $14 million annually, officials estimated.
The biggest impact was felt by substitute teachers, said Gayleen Gandy, president of the school board. The best ones, she said, regularly work more than 30 hours a week. The administration’s delay is unlikely to cause the district to review the new cap on hours.
“From what I understood, the change simply extended the implementation timeline,” she said. “That really doesn’t change anything about what we decided. It just put us ahead of the game for next year.”
Pace, the music professor, said it will be a challenge to make ends meet, even with the odd jobs he does to supplement his college income, which has been cut to $17,000 a year. He gives bass and guitar lessons in his Del Ray home, plays live gigs around the Washington area and runs a nonprofit group called the D.C. Jazz Composers Collective.
He said the state should have recognized the contribution of workers such as himself and coughed up the extra money to offer insurance. Because that didn’t happen, he said, he would have preferred to keep the status quo rather than to end up with reduced hours and an $8,000 pay cut.
“We treat this as our job,” Pace, 34, said. “We devote all of our time and love and hours to teaching our adjunct classes. This isn’t right on any level.”