CEPR - Center for Economic and Policy Research


En Español

Em Português

Other Languages

Home Publications Blogs Beat the Press Fixing Glitches in Health Care Law is Not the Same as Special Interest Lobbying

Fixing Glitches in Health Care Law is Not the Same as Special Interest Lobbying

Monday, 27 May 2013 05:25

The NYT had a piece noting that as a result of political gridlock Congress has not fixed a number of glitches in the Affordable Care Act. While the piece does mention several items that are in fact glitches, it also includes a number of issues that are simply lobbying to benefit special interests.

For example, it correctly notes that the provision setting 30 hours a week of work as a cutoff for requiring employers to provide insurance or pay a penalty was a glitch, however it absurdly follows industry groups in implying that raising the numbers to 35 hours or 40 would fix it. Of course the problem is that it is a discrete number of hours rather than a pro-rated payment. Wherever the cutoff is placed there will be a strong incentive for firms to cluster hours just below it, unless the number is put high enough so that almost no employees would cross it in any case.

The article includes a death panel type assertion. The article begins by citing Scott DeFife, a restaurant industry lobbyist, warning of a trainwreck from the law. A few paragraphs later it quotes him:

“Are we really going to put the private sector in a situation where there’s a real potential mess for posturing points?"

The piece never describes the potential mess that Mr. DeFife is concerned about. Needless to say, the bill will create inconveniences for many businesses as does the current health care system. There is no evidence presented in the piece that the law would risk major damage to businesses, we just have the NYT taking empty assertions from an industry lobbyist at face value.

Comments (8)Add Comment
Ceilings, Floors and Everything in Between: Welcome to Cluster Competition
written by Last Mover, May 27, 2013 6:39
Wherever the cutoff is placed there will be a strong incentive for firms to cluster hours just below it, unless the number is put high enough so that almost no employees would cross it in any case.

Exactly. Clustering is a well known phenomena among economists driven by incentives to be morally hazardous when the cutoff points are binary rather than continuous.

For example women clustered for years under the glass ceiling that barred them from executive and management positions, held there on grounds they were a morally hazardous threat to the men who ran the place.

At the other end of the scale is the minimum wage floor that acts as a ceiling where thousands of unemployed cluster below it, begging to work for less but are barred by employers not allowed to pay them less.

In each case clustering disappears when the labor market gets tight because it's necessary to pay workers what they are worth in order to attract them as wages rise above established floors and ceilings which become irrelevant.

However, employers gave been gradually weaned off the quaint notion of "competition" from tight labor markets over the years as something to be born by employees rather than themselves.

That's why it's essential never to allow any labor market to get tight. Always maintain an army of the unemployed to guarantee that cluster competition results not only in the lowest possible wages, but productivity gains from labor are routed straight past workers to the upper 1%.
Overstated NYT piece
written by Robert Salzberg, May 27, 2013 8:03
The NYT piece doesn't mention that the ACA has already been 'fixed' in 2 ways.

The reporting requirement in the ACA for independent contractors getting $500 or more was 'fixed'.

The CLASS Act has been effectively eliminated through de-funding, so a major component of the ACA, namely a national long-term care insurance pool, will not take effect.

There are also multiple pilot programs for innovation in the ACA along with a mechanism for waivers that should have been included in any comprehensive analysis of the future of the ACA.

inequality is the real issue
written by mel in oregon, May 27, 2013 8:33
Congress & major media constantly harp about the danger to small businesses of raising the minimum wage. There is a huge underground economy that pays hundreds of thousand workers less than minimum & is never filed with the IRS. Small businesses fail at an enormous rate anyway, & more so now than at any time in the last 50 years. There is no recovery & no "green shoots", to believe otherwise is just ignorance & stupidity. Protests won't change anything, the Occupy movement learned the hard way that from the Fed on down, government will use any means & as much violence as necessary to stop any attempt to force the financial power in this country to change & be more rational. As George Carlin said, "F. hope".
Why not eliminate the threshold for ACA coverage completely?
written by Robert Salzberg, May 27, 2013 8:41
Since large companies are bound by fiduciary duty to maximize profits, the provision in the ACA that covered employees must work at least 30 hours serves as an incentive for increasing the use of part-time workers to avoid paying the added costs of the ACA.

Instead of adjusting the 30 hour threshold, why not eliminate it?

Any company, large or small that has employees, should bear some responsibility to pay those employees enough per hour so that the employees can live a dignified life without relying on government assistance. Health care/insurance should be part of that dignified life.

Instead of a hard limit, why not mandate that companies provide a sliding scale portion of their health costs based on hours worked. So an employee that works 20 hours a week would get half the benefits of an employee that works 40 hours a week.

Penalties for not providing insurance could also be extended to part-time workers on a similar sliding scale basis based on hours worked.
Final, desperate push by the restaurant industry
written by Jennifer, May 27, 2013 8:48
Between the ACA and the Fight for Fifteen movement (nationwide wildcat strikes to increase the wages at fast food places) there is some real pressure building on restaurant industry employers. I'm guessing at some point some chains are going to break out of the pack to provide better for their employees, and then the rest will have to follow. An article on this topic would have been more useful then repeating the obvious, that the restaurant industry does not want to provide this benefit.
Nevertheless it is kind of amusing that the Republicans are so completely removed from reality they won't even try to attempt to please industry friends. There really could have been a better law if Republicans had honestly engaged in the process of making the ACA.
Also the article kind of undercuts in own argument-that there is something unique in not making any changes before such a major bill is implemented. It cites laws relating to adjustments to Social Security and Medicare-these changes were passed years after the initial laws were passed. So the wait and see approach is nothing new.
Correction to CLASS Act status
written by Robert Salzberg, May 27, 2013 8:55
The CLASS Act was stripped from the ACA as part of the fiscal cliff deal. I mistakenly said it was just de-funded in a previous post.
written by watermelonpunch, May 27, 2013 10:50
Last Mover seems to have a finger on an actual pulse.

as does the current health care system

Yes, why does no one address this???

Nobody likes to mention how the CURRENT previous health care system in the U.S. works... or rather doesn't work for a lot of people.

I think it takes gall to point out that some employers might stay below whatever cut-off to not have to provide health insurance, when the fact is, many employers already do that.

And if that's truly your issue... That you think that it's problematic that some employers will game an employer-provided health care system.
The answer is obvious.
written by PeonInChief, May 27, 2013 1:55
The part-time problem isn't that difficult. Many employers (if their insurance contract allows it) cover part-time employees, who pay a share of the employer premium for the insurance. We should have more problems that are so simple to solve...

Write comment

(Only one link allowed per comment)

This content has been locked. You can no longer post any comments.


Support this blog, donate
Combined Federal Campaign #79613

About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.