Report: More Low-Wage Workers Losing Benefits Under Obamacare

Posted: Apr 15, 2014 10:33 AM
Report: More Low-Wage Workers Losing Benefits Under Obamacare

The departure of HHS Secretary Kathleen Sebelius won't stop our Obamacare chronicles, as new developments continue to beset the unpopular health law. Today's Wall Street Journal explores the deleterious impact Democrats' signature overhaul is having on workers -- often low wage -- who work "variable hour" professions. The report focuses on employees of food services monolith Sodexho, but notes that similarly-situated companies are likely to follow suit in the coming months and years. Obamacare is all about fighting for the little guy, supporters will be quick to inform you. Except when it's not, which turns out to be often (via YG Network):

Susan Caspersen was in a hospital in Akron, Ohio, last November recovering from an emergency appendectomy when she got some unwelcome news: as of Jan. 1, 2014, she would no longer be eligible for the health-insurance plan offered by her employer, food-service giant Sodexo USA. Ms. Caspersen, a waitress at Virtues Restaurant in the Summa Akron City Hospital, falls into part of the workforce that may feel the strongest effects of the Affordable Care Act: workers whose hours change on a weekly or seasonal basis. Thousands of these so-called variable-hour employees—many of whom work on college campuses that don't operate during summer months—could lose their benefits as employers use new formulas to classify workers as full time or part time. The distinction determines which employees are entitled to company-sponsored health coverage...A large portion of Sodexo's 125,000 U.S. workers are variable, and about 10,000 of them are losing access to health insurance, paid vacation and sick days and other benefits available to full-timers. Sodexo says it has taken steps to ease the strain on workers, but avers that the new formula lets it manage costs and stay competitive in a business driven by low-margin contracts. Other employers are likely to follow Sodexo's lead in reclassifying workers as they get closer to the ACA's Jan. 1, 2015 compliance deadline, said Gary Claxton, a vice president at the Henry J. Kaiser Family Foundation, who said that businesses sought clear guidance from government officials on how to handle workers with nonstandard hours.

Er, isn't the new employer mandate compliance deadline January 1, 2016 now? In any case, Sodexho says it's made as many adjustments as it can to mitigate the damage, but the law is the law -- and it has consequences:

Peterson [Sodexo's VP of compensation and benefits] says ‘the ACA, on a net basis, is costing the company material amounts of money.’ The law's requirement that individuals buy coverage ‘has driven thousands of employees into our medical benefits and that's offset any savings from the change in eligibility,’ she said.”

The "Affordable" Care Act's repercussions are reverberating at a small business in Maryland, where the owner of a family-owned grocer has made the difficult decision to stop hiring full-time workers (via the Free Beacon):

"Like so many other small businesses around the country, he's keeping the number of full-time employees here at 49."

Independent of their intentions, policy decisions don't happen in a vacuum. Supporters of the president's proposed minimum wage hike should take note. In February, Kathleen Sebelius stated that no evidence exists that Obamacare is negatively impacting employment. "There is absolutely no evidence -- and every economist will tell you this -- that there is any job loss related to the Affordable Care Act...I know that's a popular myth that continues to be repeated, but it just is not accurate," she told an Orlando audience. Setting aside the piles of anecdotal evidence to the contrary, including the reports cited above, Sebelius' statement is patently false on a statistical basis, too. The nonpartisan CBO determined that the ACA will reduce the US workforce by the equivalent of 2.5 million full-time workers over the coming years. The report also stated that Obamacare has stifled economic and job growth. That buzzworthy analysis was released before Sebelius made her comments, which makes them even less credible. President Obama offered similar false assurances last year, which were contradicted at the time by several pieces of empirical evidence. I'll leave you with this quote from an angry New Yorker:

State officials say the decision served to level the playing field for insurance companies and consumers. But it has led to complaints from consumers who cannot go to the doctors or hospitals they want. The sickest customers tend to be the most upset, like Abigail List, a 53-year-old therapist in Manhattan, who said she had to choose one of the most expensive plans, costing $300 more a month than others, so she could have coverage for her longtime cancer doctors at NYU-Langone Medical Center. “I’m being railroaded, that’s why I’m so furious,” Ms. List said...The most prestigious and specialized hospitals tend to take the fewest plans on the exchange. Memorial Sloan-Kettering Cancer Center, the renowned cancer hospital, takes only two exchange plans for individuals, Health Republic and Oscar.

Those details are part of a New York Times story portraying the state's Obamacare exchange as a great success. Unlike most states, New York's average premiums have dropped under Obamacare -- and all it took was severely curtailed networks and options for consumers (many of whom lose their existing coverage under the law). All Americans were unequivocally promised that they could keep their preferred plans and doctors.