The first phase, just gone into effect, stipulates that any employer with 100 or more full time employees must provide health care coverage to at least 70% of them plus coverage for their dependent children up to age 26 or pay a fine to the government. The second phase, due to begin in January 2016 – unless Obama illegally delays it again – would lower the threshold to 50 employees and raise the minimum number of employees covered to 95%.
So, what is likely to be the overall effects of this employer mandate? Of the 6 million firms in the United States, 5.8 million – roughly 96% – have fewer than fifty employees and will not be adversely affected. Since about 95% of the remaining 200,000 firms with more than 100 employees already provide health insurance coverage for their employees, there are only about 8,000 firms that will be forced to provide health insurance or pay a fine. But those firms are some of the largest in the world.
The second largest corporation in the United States is McDonalds Corporation. Although 85% of McDonalds' 35,000 restaurants are franchised, 15% (5,250), representing 250,000 employees, are operated by corporate. While McDonalds offers employees low cost health insurance, the company does not contribute to the cost of the premiums. I predict that McDonalds, which operates in 118 countries, will follow Burger King and move its corporate headquarters from Oak Brook Illinois to a foreign country to avoid the cost load of the UACA.
Wal-Mart, the country's largest corporation, has 1.4 million US employees, only 54% of whom are covered by health insurance. Furthermore, Wal-Mart's insurance plan is low premium ($32.70 bi-weekly) and high deductible ($4,400 with a $10,000 maximum). Although the government, typically, had not yet finalized the rules in time for the employee mandate rollout, it's a pretty safe bet that Wal-Mart's plan will be arbitrarily deemed inadequate by the Washington bureaucrats. I don't know what Wal-Mart will do when the employer mandate vise closes in on them, but there's no compelling reason for them to stay in Bentonville Arkansas.
One of the major effects of the employee mandate will be a worsening of conditions for part time employees. On 1 January 2015, Wal-Mart dropped health converge for part time employees in an attempt to offset higher health insurance costs imposed by UACA, a move that affects 30,000 Wal-Mart associates. This follows similar decisions by Target, Home Depot and other retail firms. In 2013, according to the global consulting firm Mercer, only 38% of American retailers still offered health insurance to their part time employees.
Moreover, the authors of the UACA typically sought to preclude employer cheating by preemptively and presumptuously defining a full time work week as 30 hours. Although their intent was to include more workers under the mandate, the effect will be that employers will restrict part-time workers to 29 hours instead of 39 hours, thus depriving them not only of insurance but of ten hours a week income. These results would have been obvious to anyone but a clueless Washington ivorytowerite.
The employer mandate is but one more example of the stupidity of entrusting the administration of anything to a deliberately ignorant and methodically mis-informed federal bureaucracy. The only viable option at this point is to repeal the whole mess.