Implementing Health Reform: Beginning The Cadillac Tax Regulatory Conversation And Other ACA News – Health Affairs BlogFebruary 24, 2015
One problem is that only about 5% of families have children and are supported by low-wage earnings; another is that higher minimum wages cause some workers to lose their jobs. Advocates of a higher minimum wage argue that the number of workers who gain far exceeds those who lose. Whatever the credibility of this calculus, there is yet another problem: If someone’s income is arbitrarily increased thanks to a legislatively mandated wage increase, someone else must pay for it.
Since economic evidence indicates that higher minimum wages don’t significantly affect employers’ profit rates, advocates instead say that employers will pass on these increased labor costs by raising the prices of their goods and services—and that “society,” or more affluent consumers, will pay these costs.
But will low-income families earn more from an increase in the minimum wage than they will pay as consumers of the now higher-priced goods? My research strongly suggests that they won’t.
Private health insurance exchanges will continue to draw broad interest from employers in 2015, but new adoptions will likely be limited to benefit programs for certain types of employee groups as employers start to ask what they have to gain from using them, according to a new report by Wells Fargo Insurance Services USA Inc.
Employers with large retiree populations, as well as firms in industries with traditionally low-wage or part-time workforces, are more likely to gravitate toward private exchanges as an alternative means of providing health care benefits next year, Wells Fargo said in its 2015 Employee Benefits Outlook report.
“There are good reasons for going into an exchange,” Tim Prichard, Wells Fargo’s executive vice president and national employee benefits practice leader in Woodlands, Texas, said. “Retiree populations and high-turnover, low-income or part-time workforces are probably a good fit for an exchange solution. But we’ve seen very few employers outside of that moving to exchanges for active employees.”
The Obama administration has blocked health plans without hospital benefits that many large employers argued fulfilled their obligations under the Affordable Care Act.
Companies with millions of workers, mainly in lower-wage industries such as staffing, retailing, restaurants and hotels that had not offered health coverage previously, had been flocking toward such insurance for 2015.
Plans lacking substantial coverage of hospital and physician services do not qualify as “minimum value” coverage under the law and so do not shield employers from fines of $3,000 or more per worker, the Department of Health and Human Services said late Friday.
The U.S. Chamber of Commerce and 17 other business groups — including the National Retail Federation and the Council for Affordable Health Care — on Wednesday (Feb. 18) sent a letter to HHS Secretary Sylvia Burwell urging her to immediately announce a two-year delay of the ACA provision that expands the small group market for employers with fewer than 50 workers to include those with up to 100 employees in 2016.
“We are expecting that there will be greater scrutiny by the I.R.S. of the independent contractor/employee distinction,” said Jeffrey Saviano, Americas director of indirect tax at Ernst & Young. “The stakes are higher for companies and the government because of the implementation of the A.C.A. and the employer mandate taking effect in 2015.”
The law requires businesses with 50 or more full-time employees to provide them with health insurance that meets certain criteria deemed to make it affordable. Ian Shane, a tax lawyer at the New York firm Golenbock Eiseman Assor Bell & Peskoe, suggested that the desire to avoid the expense of providing coverage and the paperwork involved in demonstrating compliance provides an incentive for small businesses to find a way to classify some workers as contractors.
“If I have 60 employees, maybe I want 11 of them to be self-employed,” he said.