Wednesday, January 7, 2015

Changing the ACA definition of full-time worker from 30 to 40 hours a week

Today Senator Collins and others will introduce a bill in the Senate to change the ACA definition of full-time worker from 30 hours to 40 hours. Those in favor of the change say that the 30 hour definition is causing employers to cut back employees hours to avoid having to offer them coverage. The problem is that the 40 hour definition has the potential to be more harmful than the 30 hour definition.

What we are seeing is policy by anecdote - you talk to someone who is impacted so you think everyone is.  The actual numbers tell a very different story.  According to the Bureau of Labor statistics: 7.4% of the workforce work 30-34 hours a week, 43.8% work 40 hours a week. So having the “cliff” at 40 hours leads to the potential for employers to drop coverage for many more employees.

Additionally, according to the Bureau of Labor statistics, the percent of involuntary part-time workers is actually shrinking - 18% down from its peak of 20% peak.

While those who don't get coverage at work can go to marketplace, as more individuals qualify for subsidies, the deficit rises.  In fact, the CBO estimated changing the ACA's definition of full-time work from 30 to 40 hours would cost the budget $57.5 billion.

To sum up, this change would have exactly the opposite impact that its proponents say they want. Fortunately, the President has already said he will veto the bill.

If opponents of the law are ready to discuss changes, supporters would be ready to discuss meaningful compromise.  One tradeoff might be fixing the family glitch and the subsidy wording in exchange for eliminating the employer mandate. Of course such a deal would have an impact on the deficit so I'm not holding my breath.

For those interested in learning more, here is some of the coverage on the issue so far:

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