Backgrounder: Obamacare and a Tale of Four Students
by Linda Christiansen, M.A, J.D., and Eric Schansberg, Ph.D.
This is a story about four current college students who have similar family situations. Whatever the intention of politicians, all four were harmed by the Affordable Care Act, popularly known as “Obamacare.”
Student No. 1 is a young graduate student still fully covered by both parents’ health-insurance plans. He works as a graduate assistant (five hours per week for a small tuition discount and a little more than the minimum wage). He also is enrolled in the university’s health insurance with no premium payments. He now has redundant insurance coverage from three plans. Surely, the university sees those premiums as part of his compensation. He derives no benefit from this health plan, however, and does not have the option to be paid more money instead. This is a lose-lose situation, because the employer is paying an expense that the employee would prefer as cash.
Student No. 2 is an undergraduate putting himself through college and covered by his father’s health insurance. He works as a resident’s assistant (RA), helping in the dorms to pay his room and board. He was also working in the campus Internet Technology (IT) department. This is his major, so it offered both compensation and relevant work experience. But because of Obamacare’s requirement to provide health insurance for those working more than 30 hours per week, the university forced him to choose between the two jobs. Since his RA job was so important to his current living costs, he dropped his IT job despite its value for his future.
Student No. 3 also is an RA with health insurance through both parents. The university requires RAs to report their work hours each week — to stay under the Obamacare mandate on hours worked. Yet, during the weeks before classes, she is “required” to work long days with no off days for training or student move-in — even though those hours are not counted for the purposes of Obamacare.
Student No. 4 attended college for a while but decided to work and take time to think about what he would like to do in the future. He works part-time for a grocery chain and wants to work full-time. Although management thinks he is an excellent employee and might have a fine career with the company, they could not offer him more hours because the company can only afford a few full-time employees. In the meantime, he is covered by his parents’ insurance.
All of these are perverse and largely-ignored consequences of Obamacare. None of these students needs health insurance but all of them have been penalized by the legislation.
We see the same sort of outcomes throughout the economy. In the last month, three surveys by the Federal Reserve branches in Philadelphia, New York and Atlanta indicated remarkably consistent results: About 20 percent of firms are cutting jobs; 20-30 percent are shifting jobs to part-time; and about 20 percent are shifting higher insurance costs to employees.
From the employee’s perspective, a recent National Bureau of Economic Research (NBER) paper by Casey Mulligan indicates that 6-11 million workers can increase their disposable incomes by reducing their work hours.
Thanks to Obamacare, there are many more contexts in which working less — and hiring people to work fewer hours — has become financially attractive. Aside from the amazingly slow pace of the economic recovery by historical standards, all of this also explains why we’ve had so much growth in part-time work and so little in full-time work.
The government has been heavily manipulating the markets for healthcare and health insurance for decades — subsidizing insurance through the workplace, restricting healthcare and health-insurance options, giving away a lot of “free” health care and so on.
Obamacare did little to reduce the problems created earlier by the government. And in its attempt to help some people, it extended those problems and added new ones — by multiplying and complicating the links between health insurance, work and family.
When we use unwieldy federal legislation to manipulate a complex, messed-up system, it’s not surprising that the results are a very mixed bag.
Linda Christiansen, M.A., J.D., is a professor of business at Indiana University Southeast in New Albany; D. Eric Schansberg, Ph.D., is a professor of economics there and an adjunct scholar for the Indiana Policy Review Foundation.