Municipalities, Businesses Make Changes Ahead of Obamacare

September 4, 2013 | Health Care, Politics
Some municipalities and businesses have cut workers' hours to avoid having to provide health insurance for them.

By Senior Correspondent Desirée Taylor
NJ Today

Municipal workers find they’re not immune from Obamacare. Town and county workers joined a growing list of employees impacted by the Affordable Care Act.

“We reduced some work hours for about 25 of our 148 part-time workers to get them just under the 30 hours so we wouldn’t have to incur that cost,” said Middletown Township Administrator Anthony Mercantante.

He says Middletown made that decision even before federal officials announced that the employee mandate provision won’t take effect until 2015. That’s when employers with 50 or more full-time workers — people who put in 30 hours or more — will have to provide health insurance or face penalties. The delay was designed to give employers more time to digest the new law, but since some labor contracts and other financial decisions must be made now, the ax is already falling.

“The good thing for us is that most people were not above 32 hours. But it’s still a reduction of hours to people who make the least money to begin with for the most part and so it really does impact people and it’s not something we really wanted to do,” Mercantante said.

Cutting workers’ hours is also something Paul Shives, the business administrator for Toms River Township, doesn’t want to do. The township relies heavily on workers to cover 24-hour operations like the county jail, so Shives may have to hire more workers and give them shorter shifts.

“Now it’s going to force us to use more employees so I’m not sure this saves any money in the long run,” Shives said.

But Raymond Castro, senior policy analyst for New Jersey Policy Perspective, calls these cutbacks premature and counter-productive.

“The economics just don’t work. When you convert someone to a part-time position, that creates all kinds of additional costs such as you’re going to have less skilled workers, you have to provide more training. There are a lot of additional costs,” Castro said. “Is it really worth it to convert a position like that so you can avoid only a $2,000 penalty?”

Castro says tax credits will reduce some costs for employers and exchanges will offer affordable health care options for individuals.

“Even with those employers who decide to cut back, the employee is going to be covered. They will still be able to go to the exchange,” Castro said.

But business owners like Jeffrey Scheininger, who provides health care for his employees and has no plans to reduce staff hours, has another concern — high premiums.

“Our premiums have been going up almost exponentially since the passage of the Affordable Care Act,” Scheininger said.

The health exchange marketplace is scheduled to open Oct. 1.