Health law hasn't driven shift toward part-timers

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.

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.

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.

"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.

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."