Obamacare and Part-Time Work

When the jobs report came out yesterday, there was immediately a push back to the conservative argument that Obamacare is causing companies to cut their employees’ hours back to avoid the employer mandate penalty. The employer mandate requires employers with more than 50 workers to offer affordable health insurance to all full-time employees (defined as those working 30 or more hours a week). If they don’t do so, the firms must pay a fine of $2,000 per employee.

Many conservatives predicted that employers would cut back hours to get under that threshold. Liberals are concerned about that as well. But a meme popped up about a month ago that Obamacare was already cutting back worker hours. This never made any sense from the start. The Obama administration delayed the employer mandate until 2015. If employers were cutting back hours already, they’re doing so more than a year in advance. Why would they be doing that? It never added up.

Well, it’s abundantly clear now that employers aren’t cutting back on full-time workers. Here’s AEI’s Jim Pethokoukis:

Obamacare is not causing a surge in part-time employment at the expense of full-time jobs. Last month, according to the volatile household survey, full time employment was up 691,000, part-time employment down 594,000. So since last December, the economy has created about 1 million full-time jobs vs. a loss of 100,000 part-time jobs. From The Wall Street Journal: ”The uptick in part-time employment earlier this year now looks like a statistical blip: Part-time employment fell in late 2012, then rebounded in early 2013, and has now fallen for two consecutive months.”

That puts that rumor to bed. But don’t take this to mean that Obamacare won’t cause workers to cut back on employee hours. There’s a pretty good chance that it actually will have those harmful effects. But we won’t see those effects until a year from now when the threat of the employer mandate is closer.

It’s good that this job report disproved the idea that employers were cutting back worker hours because of Obamacare. But this shouldn’t overshadow the fact that the employer mandate isn’t good policy. We may not see the harmful effects of it now, but we likely will in the future.

Delaying the Individual Mandate Isn’t A Real Possibility

One thing that Republicans have been clamoring about recently is for a one-year delay in the individual mandate in response to the Administration’s (unlawful) decision to delay the employer mandate a year. This morning, National Journal and Public Notice hosted an event at the Newseum titled “Fiscal Fallout: What is ‘Responsible’ in Today’s Fiscal Reality” with keynote addresses from Sen. Orrin Hatch (R-UT) and Center on Budget and Policy Priorities’s Robert Greenstein as well as a panel discussion on our fiscal situation. Near the end of the panel,  Bill Hoagland, the Senior Vice President at the Bipartisan Policy Center, discussed the possibility of delaying the individual mandate for a year:

You can’t defund Obamacare on a continuing resolution because 90% of Obamacare is entitlements so it doesn’t make any sense, but I do think Bob [CBPP’s Robert Greenstein] passed over one small thing. He mentioned that a delay would increase the number of uninsured by 11 million. Yet he did not mention that the CBO’s cost estimate on that was that it would save $35 billion too. I’m not here to propose a delay, but for the average person listening to this debate outside, [they may say,] ‘Wait a minute. You delayed the employer mandate. Why can’t we delay the individual mandate?” And I worked with some insurance companies also so I know that the argument will be that this will drive up premiums immediately. Quite frankly, premiums have been set here for the exchanges starting in a few weeks and the companies don’t know what the experience is going to be anyway. So I don’t find a delay necessarily to be bad. In fact, I would almost think the Administration would want a delay to get the exchanges ready [while] other provisions of the law remain in effect – no [rejecting people with] pre-existing conditions, [allowing young people to stay on their parents’ insurance] up until age 26. So I think one of the outcomes here will be that you hear more about a delay. And I’m not proposing it. I’m just suggesting you’ll hear more about a delay.

First of all, under no circumstance is the Obama Administration going to delay the individual mandate for a year. They’ve fought off challenge after challenge for the law to get to this point and they believe (as I do) that once it officially begins, it will be here to stay. Based on their desperate, stubborn refusal of House Republicans to fund the government unless the Administration agrees to defund the law, they seem to agree as well.

Second, just delaying the individual mandate would be a disaster. Hoagland says he understands the counter argument to such a delay, but he doesn’t seem to. The problem is that if you delay the individual mandate, but still require insurance companies to cover everyone with pre-existing conditions then the death spiral ensues. Only unhealthy people sign up for the law while healthy people forego insurance. Without the offset of those healthy people paying into the system, these insurers must raise premiums to cover the unhealthy ones. Hoagland notes this, but uses a bit of hand-waving to say that insurance prices are locked in and thus insurers won’t be able to raise premiums. Well if that’s the case, then insurance companies will go bankrupt. The companies came up with insurance premiums assuming that young, healthy individuals would purchase insurance. Their business model falls apart if those individuals aren’t required to sign up, but the firms are not allowed to revises their premiums.

Thus, if Hoagland wants to delay the individual mandate (which he never says he wants to do – he’s just suggesting it’s going to come up), then we must delay the pre-existing condition requirement as well. This would effectively delay the entire law and give Republicans another year to figure out how to repeal and undermine it. They can even try to delay it until the midterm elections where they will hope to win back the Senate and repeal it altogether (of course, the President would veto such a bill).

So, contrary to Hoagland’s suggestion, this isn’t something you’re going to hear more about. It would be an epic disaster policy-wise and the Administration isn’t going to consider it. Obamacare is the law of the land and that’s not changing.

Raul Labrador Has a Point

Over the weekend, Raul Labrador appeared on Meet the Press to talk about immigration reform:

In fact, if you look at this Obamacare debacle that they have right now, this administration is actually deciding when and where to actually enforce the law. And that’s what some of us in the House are concerned about. If you give to this administration the authority to decide when they’re going to enforce the law, how they’re going to enforce the law … what’s going to happen is that we’re going to give legalization to 11 million people and Janet Napolitano is going to come to Congress and tell us that the border is already secure and nothing else needs to happen.

Sounds a bit crazy, right? Not really. Republicans have been clamoring for years now about the authoritarian Obama administration. Much of it has been utter bogus, but Labrador has a point here and we can look right back to last week’s delay of the employer mandate to see it.

The employer mandate requires all employers with more than 50 workers to offer affordable health insurance or pay a $2,000 fine. Implementing this policy has proven difficult so the White House announced last week that it was delaying the employer mandate until 2015. Except the Obama Administration doesn’t have the ability to do that. Congress does. Instead, the Administration told the IRS to not enforce the $2,000 fine for a year. That’s not how the government is supposed to work. Here’s Ezra Klein last week:

This is a regulatory end-run of the legislative process. The law says the mandate goes into effect in 2014, but the administration has decided to give it until 2015 by simply refusing to enforce the penalties.

The administration says this kind of thing happens all the time. “I think you’d be harder pressed to find some example where there wasn’t some discretion on how to implement major policies than one where everything went exactly by the books,” says one senior administration official involved in implementation.

Be that as it may, the regulatory solution reflects the fact that the legislative process around the health-care law is completely broken. Republicans won’t pass any legislation that makes the law work better. Improving the law, they fear, will weaken the arguments for repeal. But Democrats, of course, won’t permit repeal. So Congress is at a standstill, with no viable process for reforming or repairing the Affordable Care Act as problems arise. And so the White House is acting on its own.

If the President had come out and asked Congress to pass a bill delaying the employer mandate for a year, do you think legislators would have obliged? I’m not sure. Republicans would be up in arms screaming for repeal again. Would they agree to the delay?  I don’t know. But even if they hadn’t, the White House would have at least tried to adjust the law legally and not used its own authority. Instead, it circumvented Congress without even trying to adjust it legally.

That’s exactly what Labrador feels could happen with immigration reform. The immigration bill that passed the Senate does not have any hard triggers so Secretary of Homeland Security Janet Napolitano wouldn’t actually have to tell Congress the border is secure before illegal immigrants could apply for citizenship. But in any bill that passes the House, hard triggers will almost certainly be part of it and would require such testimony from Napolitano.

Why are Democrats so against hard triggers? They fear that a future Republican Secretary of Homeland Security will never declare the border secure to prevent illegal immigrants from receiving citizenship. Labrador has the exact same fear: that a future Democratic Secretary of Homeland Security will definitely declare the border secure, even if it isn’t, to allow illegal immigrants to apply for citizenship. Republicans favor hard triggers because it’s much harder to declare the border secure when it isn’t than to declare it insecure when it is. Nevertheless, Labrador has the same fear that Democrats have. Both are rooted in a deep distrust of the opposite party with the belief that a future administration will simply bend the rules to get what it wants.

With the employer mandate, the Obama Administration did just that. Raul Labrador isn’t crazy. Conn Carroll isn’t foolish to suggest that “immigration reform is dead and Obamacare implementation killed it.” That may be a bit extreme, but it’s not unfounded. It’s just an ugly component of the dysfunctional, distrustful atmosphere that plagues our political system right now.