Changes in ObamaCare will require businesses to count part-time workers for coverage penalties

Much of the focus on the stalled ObamaCare effort comes from the opposition of Blue Dog Democrats to the removal of the Stupak amendment in the Senate bill, allowing for federal abortion funding if Congress fails to renew the Hyde Amendment.  The rest of the attention has gone to the changes being made in a parallel bill, one that the Senate will use reconciliation to pass to resolve disputes between the House and Senate over taxation and budgeting.  Those aren’t the only changes being contemplated, however, as the AP reports:

A Democratic aide says a new provision in the health care bill will require businesses to count part-time workers when calculating penalties for failing to provide coverage.

The bill originally passed by the Senate only penalized businesses for full-time workers who weren’t covered. The Senate bill is being used as the basis for a final package President Barack Obama wants Congress to pass in the next few weeks.

Very few businesses provide health-care coverage to part-time employees.  Many small businesses employ part-time staff in order to keep costs down and remain flexible as demand fluctuates.  People can choose, of course, whether they want to work part- or full-time by accepting or declining offers of work, just as businesses can choose (for the moment) what benefits they want to offer to make themselves competitive in the labor market.

Congress wants this change in order to head off a potential hole in their plans to impose federal coverage mandates on businesses.  The original bill only required businesses to count their full-time staff to determine whether they meet the threshold for compliance and to calculate penalties, if applicable.  That would have created pressure on the labor market by incentivizing businesses away from offering full-time employment, where possible. Employers would have a big reason to reclassify their positions to part time work, reducing hours for their workers, although likely by also adding staff to make up the labor shortfall.

This change in the parallel bill would have a big impact on small businesses, who already have trouble competing with their larger competitors.  It will force businesses into either paying for benefit packages that they can’t afford with their current staff levels, pushing them either into cutting staff to recoup the costs or shutting their doors altogether.  It will have a major impact on the part-time labor market, which supports student workers and second earners in families under normal economic conditions.

One might have expected such a significant change to get more attention.  Instead, it appears that Democrats in the House are trying to sneak this one through the process in the dark.  That may qualify as “open, honest government” by the standards of Nancy Pelosi, Harry Reid, and Barack Obama, but small businesses won’t like getting hoodwinked.

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