Local Governments Reeling Under ObamaCare Costs

By JOHN MERLINE, INVESTOR'S BUSINESS DAILY


When Regal Entertainment Group (RGC) in April blamed ObamaCare for the fact that it was cutting some of its workers' hours, backers of the law mounted a furious backlash against the theater chain, among other things filling its Facebook page with boycott threats.

"Greed and selfishness make me sick," one of them said.

Darden Restaurants (DRI) felt this intense heat last year after suggesting it might shift to more part-time work to minimize the cost of the law's mandate that companies offer coverage to all their full-time workers. CEO Clarence Otis even blamed its lowered outlook for 2013 in part on "recent negative media coverage" over "how we might accommodate health care reform."

Yet while private companies are getting all this unwelcome and hostile attention, local governments across the country have been quietly doing exactly the same thing — cutting part-time hours specifically so they can skirt ObamaCare's costly employer mandate, while complaining about the law in some of the harshest terms anyone has uttered in public.

The result is that part-time government workers — many of them low-income — face pay cuts that can top $3,000 a year, and yet will still be left without employer-provided benefits.

Here is just a small sampling of local news reports about what local government officials are saying about ObamaCare, and the steps they're taking to avoid or minimize its costs:

Phillipsburg, Kan.: "School administrators here say they are alarmed and confounded by the looming new costs they face with the implementation of the Affordable Care Act," according to the Kaiser Health Institute News Service. Chris Hipp, director of a Kansas special education cooperative, warned that ObamaCare's costs "could put us all out of business or change significantly how we do business," adding that "we are not built to pay full health benefits for noncertified folks who work a little more than 1,000 hours a year."

Dearborn, Mich.: "If we had to provide health care and other benefits to all of our employees, the burden on the city would be tremendous," said Mayor John O'Reilly, explaining why the city is cutting its more than 700 part-time and seasonal workers down to 28 hours a week. "The city is like any private or public employer having to adjust to changes in the law."

Indiana: "What I'm seeing across the state is school districts, unfortunately, having to reduce the hours that they are having some of their folks work, primarily so they don't have to worry about the (ObamaCare) penalties, or they don't have to provide them health insurance, which would be very, very costly," said Dennis Costerison, executive director of the Indiana Association of School Business Officials. Ft. Wayne Community Schools, for example, are cutting yours for nearly three-quarters of its part-time aides.

Omaha, Neb.: "The biggest problem is everyone said that ObamaCare is only going to help cut costs. Nothing could be further from the truth," said Mike Kennedy , who serves on the board of Millard Public Schools, just outside the city, and figures ObamaCare will raise its costs by $400,000. A neighboring school district is reducing hours for up to 281 part-time employees to avoid $2.5 million in new costs, which will result in pay cuts of up to $3,300.

Long Beach, Calif.: "We are in the same boat as many employers," said Tom Modica, Long Beach's director of government affairs. "We need to maintain the programs and service levels we have now." So the city is going to cut hours for 200 part-time workers so it doesn't have to pay $2 million to provide health benefits.

Salt Lake City: "With new provisions in the Affordable Care Act, there was going to be a significant burden upon Granite School District and our taxpayers to offset the cost of benefits," said spokesman Ben Horsley. He says covering the district's part-time workers would cost about $14 million, and so about 1,000 will have their hours cut to 29 a week.

Cape May County, N.J.: "A number of people in the nation who read it are recognizing how detrimental (ObamaCare is) to government and private employers out there," said Gerald Thornton, the county's finance director who is trying to figure out how to budget for the law.

Virginia: "The Commonwealth of Virginia is grappling with the same issues that many businesses in the private sector are as they struggle to deal with the costs imposed by the Affordable Care Act," Paul Logan, a spokesman for Gov. McDonnell, said. The state is requiring that about 7,000 part-time government workers put in no more than 29 hours a week.

Texas: "The Affordable Care Act has added so much complexity and administrative burden that there is nothing affordable about it," said Jared Pope, who is consulting with Texas municipal governments on ObamaCare. Dallas expects its health costs to climb $2.1 million next year. Plano is cutting hours to avoid $1 million in new costs.

Kern County, Calif.: "It will affect multiple departments, a majority of departments," said the county's deputy administrative officer Eric Nisbett, explaining that unless the county cut worker hours for 800 employees, ObamaCare would cost it up to $8 million a year.

Allegheny County, Pa.: "There's frustration and anger and sadness and resentment, you know, but you don't have a voice," said adjunct English professor Clint Benjamin in the wake of the Community College of Allegheny County's decision to cut hours for about 400 adjunct faculty and other employees so it wouldn't have to pay $6 million in ObamaCare-related fees next year.

Medina, Ohio: "We feel bad as a city administration and as a council in having to cut hours from 35 to 29," Medina Mayor Dennis Hanwell said. "We have the budget to pay the people, but we do not have the budget to pay for the health care." If they hadn't made that cut, the city faced up to $1 million in new health costs courtesy of ObamaCare.

Birmingham, Mich. Commissioner Gordon Rinschler may have summed up best the reaction that countless businesses and governments are having to ObamaCare, saying: "We simply can't afford the Affordable Care Act."

"Yet another nail for the coffin. U.S. health care expenditures are around $12 per hour for the entire economy. The minimum wage is $7.25 per hour. If a minimum wage worker paid 100% of his income in taxes (or health care premiums), America would still lose $4.75 on health care costs alone."

http://www.bizjournals.com/atlanta/morning_call/2013/08/ups-to-drop-15000-spouses-from.html?ana=RSS&s=article_search&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+bizj_atlanta+%28Atlanta+Business+Chronicle%29

UPS to drop 15,000 spouses from insurance, cites Obamacare

United Parcel Service Inc. plans to remove thousands of spouses from its medical plan because they are eligible for coverage elsewhere. The Atlanta-based logistics company points to the Affordable Care Act, or Obamacare, as a big reason for the decision, reports Kaiser Health News.

The decision comes as many analysts are downplaying the Affordable Care Act's effect on companies such as UPS, noting that the move reflects a long-term trend of shrinking corporate medical benefits, Kaiser Health News reports. But UPS repeatedly cites Obamacare to explain the decision, adding fuel to the debate over whether it erodes traditional employer coverage, Kaiser says.

Rising medical costs, “combined with the costs associated with the Affordable Care Act, have made it increasingly difficult to continue providing the same level of health care benefits to our employees at an affordable cost,” UPS said in a memo to employees.

According to Kaiser, UPS told white-collar workers two months ago that 15,000 working spouses eligible for coverage by their own employers would be excluded from the UPS plan in 2014.

UPS expects the move, which applies to non-union U.S. workers only, to save about $60 million a year, company spokesman Andy McGowan said.

The health law requires large employers to cover employees and dependent children, but not spouses or domestic partners, Kaiser adds.

Kaiser said the Obama administration would not respond directly to UPS' statements, but said that employer coverage increased when Massachusetts implemented its own version of the health overhaul.

"The health care law will make health insurance more affordable, strengthen small businesses and make it easier for employers to provide coverage to their workers," said Joanne Peters, spokeswoman for the U.S. Department of Health and Human Services.

Some think that a total failure of Obamacare is just another step towards the endgame of single payer. While I don't find it desirable, it might very well be compared to the effects on the ground of the ACA.

What happens when all those 26-30 somethings (and under 26s not covered by parents) decide its cheaper to pay the penaltax rather than the coverage level that they don't require (as basic catastrophic coverage is no longer basic and therefore approaching 'bronze' levels of cost). If you have a job with coverage and have the gall to cover your family, be prepared to pay a penalty. If you are young and employed without coverage and want to buy it individually, you get the double whammy of subsidizing the elderly through your social security taxes, as well as the insured older echelon through your increased individual healthcare premiums.

This news of UPS corresponds with reports from the food service industry and others pushing towards more part time work that falls under the healthcare mandate.

I can't imagine a fix for this until we find a way for basic healthcare to be a reasonable out of pocket expense with catastrophic coverage as a backup. Please see any other sort of insurance (without heavy governmental involvement) for an example.

According to Peter Schaeffer:




And moar scary pictures:

http://www.forbes.com/sites/danmunro/2012/12/30/2012-the-year-in-healthcare-charts/

The Affordable Care Act does need some modifications to it, because as it does right now, what's happening is, you have employers that the law says if you pay your, if your employees work 30 hours or more a week, you've got to give them healthcare. So they're restructuring their workforce to give workers 29 and a half hours so they don't have to provide them healthcare. They’re also doing some taxing to nonprofit plans to pay for for-profit plans.

I thought Carney said that wasn't happening. Or is this just a scare tactic?

According to HuffPo, Trader Joe's has followed the current trend and is cutting coverage for everyone who works under 30hrs/week. They will provide a $500 check to help offset the cost of coverage on the ACA exchanges.