Health law hasn't driven shift toward part-timers

  • Article by: JIM SPENCER , Star Tribune
  • Updated: February 4, 2013 - 2:52 PM

Data suggest employers, so far, aren't avoiding full-time hires to dodge insurance requirements.

WASHINGTON - One of the biggest complaints about the new federal health care law has been that it could lead employers to hire part-time and temporary workers to avoid providing insurance.

So far, it's not happening. Despite impending new health care requirements for full-timers, the percentage of openings labeled "temporary or seasonal" in Minnesota was the same in the first six months of 2012 as it was in the first six months of 2008, according to state data.

"It clearly makes a good talking point for people who want to create fear and anxiety about the Affordable Care Act," said Washington and Lee University law Prof. Tim Jost, one of the country's leading experts on the new law. "But I think it is largely untrue."

The suggestion that employers are headed toward larger part-time and temporary work forces, one often leveled by conservative critics of the health care law, is based on surveys like one by the human resources consulting company Mercer.

A July 2012 Mercer survey of 1,215 businesses found that 149, or 12 percent, of them were likely to have fewer employees work more than 30 hours a week. Generally, employees working fewer than 30 hours a week or fewer than 90 days are not covered by the health care law.

Isolated incidents also have been reported, such as a decision by the Community College of Allegheny County, Pa., to cap the hours of temporary part-time employees, including adjunct professors, at 25 hours a week.

But most experts say the collective impact won't be measurable for a few years because many provisions of the law do not take effect until January 2014.

Ameriprise Financial senior economist Russell Price said it is too soon to judge. "It will be limited to certain industries, like restaurants and retail," he said. "But overall the economy is improving and should pick up in 2013."

Price believes any reductions in hours or increases in part-time or temporary hiring "will be overcome by the broader momentum in full-time employment."

Officials at Mercer expect the percentage of companies that actually adopt part-time and temp hiring strategies to evade coverage requirements to be less than 12 percent, because of productivity and quality risks.

The consulting company is advising its clients to "not make a rash decision," said Stefan Gaertner, one of Mercer's senior consultants for workforce analytics. "The knee-jerk reaction is to find a way to minimize costs. This is not enough to make a good decision."

The numbers in Minnesota show no statistically significant trend toward increasing percentages of part-time or temporary hires since the health reform law passed Congress on March 23, 2010, said Steve Hine, the state's labor market research director.

The Great Recession drove part-time hiring up in late 2008, 2009 and early 2010, data from the Minnesota Department of Employment and Economic Development show. Since then, the percentage of part-time vacancies has remained roughly static or gone down at Minnesota employers that would be affected by the new health care law.

Aon Hewitt, one of the country's largest human resources consultants, conducted a national survey of 562 employers around the second anniversary of Obamacare's passage and "found that 94 percent are committed to offering and financially supporting health benefit coverage for their workforce in some form going forward."

Jost predicted some attempts to skirt the requirement "for political, as well as economic reasons."

"People opposed to this kept hoping it would go away," he said. Now that health care reform has survived a Supreme Court decision and a presidential election, it looks like it's here to stay, Jost continued, and the best hope for opponents is that it won't work.

Law's requirements

Beginning in January 2014 the Affordable Care Act generally will require employers with more than 50 full-time equivalent employees to offer "adequate and affordable" health insurance. Those that don't face penalties if one or more of their uninsured employees gets government-provided premium tax credits when buying coverage through an individual health insurance exchange.

The penalty is generally $2,000 per year for each full-time employee, excluding the first 30 workers, for employers that offer no health insurance at all. Employers that offer health insurance that the government judges inadequate and unaffordable may be penalized  $3,000 for any single full-time employee who receives premium tax credits through the exchange.

Jost believes some employers of low-wage workers whose workforce is now close to but fewer than 50 full-time employees may cut hours or keep new hires from working more than an average of 30 hours per week to keep from being legally forced to provide insurance. Temporary workers employed for 90 days or fewer are also exempt from coverage.

"In low-wage and retail industries, there may be an incentive to shift workers to part time," agreed Larry Levitt, a senior vice president with the Kaiser Family Foundation.

Longstanding trend

Levitt, a senior health policy adviser in the Clinton White House, said trying to avoid paying for employee benefits by hiring part-timers predates the Affordable Care Act.

"The health reform law will further that trend," he said. "But there are limits. You can't make everyone part time. For a business to operate efficiently, that's just not possible."

Human resource consultants at Aon Hewitt say companies also may come together to form "corporate exchanges," where larger groups of employees drive lower premium costs for themselves and their employers.

The idea is similar to the health care law's individual insurance exchanges, where people will comparison shop for coverage the same way they might book a hotel room.

Nearly half of businesses surveyed by Aon Hewitt said they expected to eventually provide employee benefits through a corporate exchange.

How all these expectations play out depends on the ease with which employers can escape the requirement to provide coverage.

Levitt of the Kaiser Family Foundation thinks it won't be easy. "It could be too disruptive to businesses to go through the contortions to avoid coverage," he said. "My sense is that employers are talking about it but aren't going to do it."

Jim Spencer • 202-383-6123

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