Dead lines

Political Cartoons by Gary Varvel

“I was really shocked that 64 percent [of uninsured adults] said they haven’t decided if they will purchase insurance by the Jan. 1 deadline,” Adams said. “I was definitely surprised by the high number of people who really have no clue what they’re going to do next year.” 

“We don’t want these consumers to miss this key deadline,” she said, adding that new heath-care exchanges under Obamacare will begin accepting applications for insurance in less than four months. “They’re going to potentially go without health care for the entire year.

Supporters of President Obama’s overhaul of American medicine are touting the early evidence from California’s Obamacare exchange (still under construction) as good news for their side.  But as the Los Angeles Times notes, the Golden State’s version of Obamacare will mean higher insurance premiums and a lower quality of care, as those who use its exchanges to buy federally mandated insurance will encounter not only higher prices but also diminished access to hospitals and doctors. 

 

The Times observes that “one downside for many consumers will be far fewer doctors and hospitals to choose from.”  The Times writes:

“People who want UCLA Medical Center and its doctors in their health plan network next year, for instance, may have only one choice in California’s exchange: Anthem Blue Cross. Another major insurer in the state-run market, Blue Shield of California, said its exchange customers will be restricted to 36% of its regular physician network statewide.

 “And Cedars-Sinai Medical Center, one of Southern California’s most prestigious and expensive hospitals, said it’s not included in any exchange plans at the moment.”

Insurers are also raising their prices in anticipation of additional costs that will come with the arrival of Obamacare, which was supposed to have been the corrective for this sort of thing. The price of health care coverage will surely continue to rise as companies are compelled to accept anyone regardless of risk. It is, after all, the measure of risk that determines the real price of insurance. Not, unfortunately, the intuition of regulators or the wishes of legislators.

As I have said repeatedly for years, mess with Adverse Selection and Health Care is doomed to go up even faster.

Under ObamaCare, the 30-hour workweek may take a cue from the clumsy Dodo bird and disappear — due to clumsy regulation.

If that sounds extreme, just consider: For a worker making $16 an hour for 29 hours per week, the 30th hour of work each week could cost an employer $112.15.

In other words, ObamaCare could cost an employer as much as $96.15 extra an hour — or six times the going hourly wage in this example.

Here’s how: Employers who offer health coverage that is deemed either too pricey or too skimpy will owe $3,000 for each full-time, 30-hour-per-week, worker who taps ObamaCare subsidies.

Because the $3,000 fine is nondeductible, it’s equal to $5,000 in deductible wages for a profit-making firm facing a 40% combined federal and state tax rate.

Simply dividing that $5,000 by 52 weeks yields an ObamaCare cost of $96.15 per hour.

The 31-hour, 32-hour, 33-hour and 34-hour workweeks also may become relatively rare.

For example, ObamaCare could tack on as much as $48 per hour for a worker clocking 31 hours, or two hours beyond ObamaCare’s care-free threshold of 29 hours per week.

Yet, even for those clocking 40 hours, the incremental cost of ObamaCare of $8.74 per hour beyond the 29th hour of work could effectively add 55% to a $16/hour wage.

When it comes to modest-skilled, modest-wage workers in highly competitive industries with low profit margins, employers will be hard-pressed to ignore such cost increases.

Not surprisingly, there’s evidence that employers are already taking steps to dodge ObamaCare’s penalties. Retailers have been cutting hours for nonsupervisory workers at the sharpest rate in more than three decades, Labor Department data show.

Still, there is much uncertainty about just how dramatic the shift to sub-30 hours per week will be. Employers will likely perceive a cost to worker productivity and satisfaction if they depend too heavily on part-timers. However, the pressure to keep prices low or risk losing business may limit flexibility.

A big unknown is the extent to which workers who are eligible for ObamaCare subsidies will opt to sign up. Doing so will require those earning 200% to 300% of the poverty level to fork over 4% to 7% of income for a bronze plan.

Some employers are betting young, low-income workers won’t. As an enticement to keep ObamaCare participation low, some firms are preparing to offer their workers “skinny” coverage for basic expenses like doctors visits and generic drugs as an alternative to paying a tax penalty.

Still, it will be harder for employers to escape ObamaCare costs for older workers, who would take on bigger risks by going without insurance. The result may be that older workers will be the most likely to see their hours reduced below 30.

The lowest earners also will be extremely likely to see their hours cut. For example, a worker earning $8 per hour would have to pay just $79 a year to get ObamaCare’s subsidized bronze-level plan, according to Kaiser Family Foundation’s health subsidy calculator. That’s less than the potential tax penalty.

Even spreading the cost of ObamaCare’s wage-equivalent penalty of $5,000 over a 40-hour workweek would effectively raise the minimum full-time wage by $2.40 an hour.

Yet this is among the worst approaches for raising a low-earner’s take-home pay because it is one that employers can avoid — but only if they punish the worker by limiting hours of work. (Andrew Malcolm)

So you’ll have expensive health insurance, but you’ll have a smaller paycheck!

Such a Deal!!

Political Cartoons by Steve Kelley

 Political Cartoons by Nate Beeler

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