The WasteWatcher: The Staff Blog of Citizens Against Government Waste

The New Normal?

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


What is becoming increasingly clear is the Affordable Care Act (ACA), often referred to as Obamacare, is changing and will change how Americans work.  Here are some examples.

According to Obamacare, any employer with 50 or more employees must provide health insurance to any employee that works 30 or more hours a week.  Dealing with Obamacare’s demands will create higher costs for employers and force them to follow many burdensome regulations.  As a result, many businesses are dropping the hours of their employees.

  • Restaurants and retail stores are reducing not only their part-time employees’ hours to below 30 hours per week to avoid paying for Obamacare but are changing more of their positions from full-time into part-time as well.
  • We are also seeing that many local governments are reducing the hours of many workers to part-time to avoid paying health insurance for any employee that works 30 hours or more.

Employers are beginning to drop the insurance they currently provide to some workers and their family members due to Obamacare’s high costs and regulations.

  • The large grocery chain Wegmans  announced that it will no longer provide any kind of health insurance to its part-time employees.  The company had been praised in the past because it voluntarily provided insurance to employees that worked 20 hours or more.
  • UPS and the University of Virginia just announced they will be dropping coverage for their employees' spouses if the spouse has coverage via another employer or can obtain access through the Affordable Care Act.

Beginning in 2018, many employers will likely drop health plans that are considered high cost or “Cadillac plans” in ACA.  Section 2009 of ACA provides for an excise “tax equal to 40 percent of the excess” of the threshold for a healthcare plan.  The threshold amount is $10,200 for an individual and $27,500 for a family plan.  These amounts will be indexed for inflation in 2020.

  • Labor unions have some of the best health plans that exist and many will fall into the “Cadillac” category in 2018.  No doubt this is why several unions sent a letter to House Minority Leader and Senate Majority Leader Reid saying, “ACA will shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class” and while “non-profit plans like ours won’t receive the same subsidies as for-profit plans, they’ll be taxed to pay for those subsidies” in the exchanges.

Some employers may decide it is less expensive and less burdensome to simply pay the fine for not providing health insurance for their employees, dropping health insurance benefits entirely.

  • Douglas Holtz-Eakin, president of American Action Forum and former Director of the Congressional Budget Office said in testimony before Congress, “Despite a mandate to offer coverage, financial incentives are embedded in the ACA that encourage employers to drop health benefits and shift workers onto the health insurance exchanges; as virtually all employers and some low and moderate income employees would be financially better off for doing so.  If the exchanges are implemented on time and become a viable market for health insurance, firms may drop benefits, pay the fine, and give employees additional wage compensation in lieu of their health insurance.

One of the more egregious effects of Obamacare is what it will do to people who would like to get ahead and make more money but could decide to reject a pay raise, or overtime, or invest because it will be too expensive to do so.  Yes, I wrote that correctly.

Under Obamacare, if one participates in their state exchange, they may be eligible for a subsidy to assist them in paying the monthly cost of the premium for a health insurance plan.  Those that make between 100% and 400% of the federal poverty level will be eligible for cost-sharing subsidies at various amounts depending on their income.  Currently for 2013, these amounts are $11,490 and $45,960 for an individual and $23,550 and $94,200 for a family of four, respectively.

  • If an individual makes $45,960, they can receive a subsidy from the taxpayers.  If they make $45,961, they will lose the subsidy.
  • A study found on ValuePenquin.com shows that Obamacare will encourage many people to work less.  The study provides examples of typical families in various states with different incomes and how just increasing their income by one dollar will cause them to lose thousands of dollars in Obamacare subsidies.  The researchers state, “Americans benefiting most from subsidies, generally those facing higher insurance costs due to state regulations or age ratings, will find themselves facing peculiar economic incentives as they reach 400% of the FPL.  Extra hours, a raise, or even investment income, may end up pushing a household into having less disposable income than they did when they were earning less.”

These are just a few examples of how destructive Obamacare is and will continue to be to businesses, employees, and the national economy.  Will the American people recognize a need that Congress and the President should repeal this law?

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