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Your Money Adviser: When Health Deductibles Rise, Men Delay Emergency Care

September 5, 2013 by

Frank Wharam, a doctor and researcher at Harvard Medical School, says he often hears these words, “My wife made me come.”

That gender dynamic may provide fodder for stand-up comics, but it can have serious health implications, especially given the increasing use of high-deductible health insurance plans.

Men, it turns out, are more likely to delay treatment for serious conditions under high-deductible plans, in contrast to women, who tend to be more selective and cut back care for minor ailments only.

That’s according to a recent study led by Katy Kozhimannil, a researcher at the University of Minnesota’s school of public health. (Dr. Wharam was a co-author.)

Such plans generally have lower monthly premiums than traditional health plans but higher out-of-pocket costs — sometimes, $4,000 or $5,000 for a family, or even higher. About a third of workers now have such plans. And that number is likely to grow, since lower-cost plans on the new health care marketplaces created by the Affordable Care Act are likely to have relatively high deductibles.

Other studies have shown that low-income people also tend to put off care under such plans. But Ms. Kozhimannil says her study is the first to examine the different impact of such plans on men and women.

The study compared emergency room visits for about 12,000 people — roughly half men and half women — for a year before, and two years after, they were involuntarily switched by their employers to a high-deductible plan.

For the first year after the switch, men’s use of the E.R. dropped across the board, even for severe conditions, like irregular heartbeat. Women cut back too, but mostly for less threatening symptoms, like headache or sore throats.

“It’s concerning that men were not going to the E.R.” for ailments like kidney stones and irregular heartbeats, Ms. Kozhimannil said. “That’s an urgent situation that requires medical care.”

Unfortunately, men also ended up with more hospitalizations in subsequent years, suggesting that they may have let a serious condition go untreated.

So, what is behind this approach? Other findings have suggested that “masculinity beliefs” make it harder for men to ask for help, Ms. Kozhimannil said, so the added worry of spending more on health care may reinforce that tendency.

Jim Kiefert, who runs an “Us Too” prostate cancer support group in Olympia, Wash., said men often worry that spending on their own care may lead to economic hardship for their families. “That is a reality with men,” he said, adding that with a costly illness and a high deductible, “You can deplete your savings in a very short period of time.”

Here are some questions to consider, if you’re a man on a high-deductible plan — or that man’s spouse.

■ How can I use my high-deductible plan wisely?

Understand your benefits. Not all high-deductible plans are the same, and many cover preventive care outside of the deductible. Under the Affordable Care Act, all plans sold on the new marketplaces and many others must offer many preventive services free, like colorectal cancer screenings.

■ How should I decide when to seek treatment?

No one expects you to be a physician, but health plans increasingly offer sound online information that can help you learn about symptoms of serious situations, like a heart attack. “It’s very useful to know what your risk factors are,” said Ms. Kozhimannil said. Most health plans also have nurse advice lines that can offer guidance, too.

■ What if I need care, but I’m worried I can’t pay for it?

Talk about this with your doctor, who might not know what cost burden you’re facing when you make decisions about proposed treatments. “Say to your doctor, ‘I have a high-deductible plan. Is there a different way to do this?’ ” suggests Alison Galbraith, a doctor at the Harvard Pilgrim Healthcare Institute who has studied the plans.

Article source: http://www.nytimes.com/2013/09/06/your-money/when-health-deductibles-rise-men-delay-emergency-care.html?partner=rss&emc=rss

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Today’s Economist: What Makes U.S. Health Insurance Exchanges So Complicated

July 19, 2013 by Leave a Comment

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Uwe E. Reinhardt is an economics professor at Princeton. He has some financial interests in the health care field.

There is much coverage and commentary on news Web sites about whether the health insurance exchanges called for in the Affordable Care Act will be ready by Oct. 1 for enrollment by individuals seeking health insurance in the nongroup market. Insurance bought there takes effect on Jan. 1. I sense that many of those commenting would like the exchanges to fail.

Today’s Economist

Perspectives from expert contributors.

Why is setting up these exchanges so difficult? After all, they are not a novel invention. The eHealthInsurance.com Web site, for example, has since 1997 functioned as an electronic exchange for private health insurance products sold in the nongroup United States market.

That exchange and similar existing private exchanges, however, are not suitable models for the exchanges envisaged in the Affordable Care Act. They function merely as passive brokers for whatever policies private insurers under contract with them choose to list. It is up to consumers to pore over the fine print of any particular insurance contract listed on an exchange for a detailed description of coverage benefits, limitations and exclusions.

There have been many reports on how coverage gaps in the fine print of such policies can leave people who believe they have health insurance in serious financial distress once they fall ill. See, for example, an analysis by Consumer Reports.

More relevant as a model in this context might be the health insurance exchanges in several European countries that operate social health insurance systems with multiple competing private insurers — Germany, the Netherlands and Switzerland prominent among them.

Let us therefore pretend that we are residents of Switzerland and rummage around in a Swiss health insurance exchange.

All Swiss residents are required by federal statute to purchase insurance coverage for a common, comprehensive benefit package prescribed in the statute. Individuals buy that coverage on health insurance exchanges whose architecture is broken down by canton and that facilitate easy comparisons of the community-rated premiums charged by the competing private insurance carriers active in the individual’s canton.

Individuals can purchase supplemental benefits — e.g., coverage for private rooms in hospitals or alternative medicine — from the same companies on the same exchanges. The premiums for these benefits, however, are medically underwritten, which means that they depend in part on the applicant’s health status.

Private insurers in Switzerland are not allowed to earn profits on the common, comprehensive, social-insurance benefit package they cover, but they can earn profits on the supplemental benefits.

The Swiss company Comparis, a general insurance broker, among other exchanges operates one for health insurance, and it is available in English.

To receive premium quotes from competing insurers, one enters the postal code of one’s residence (e.g., 3010 for a part of the city of Bern). One is also asked to identify one’s current insurance carrier in a pop-up list of carriers serving the canton. As if I were a Swiss resident, I randomly clicked on “Publisana” from that list. (A new resident would click on “Relocating to Switzerland.”)

Because basic benefits are standard across Switzerland, the only consumer choice with regard to the benefit package is the deductible, which can range from 300 to 2,500 Swiss francs. (At current exchange rates, a Swiss franc is about $1.06.)

At the bottom, one can choose comparisons among standard coverage, a gatekeeper model (with a general practitioner), health maintenance organizations and telemedicine (shown as Telmed). I recommend “standard,” offering free choice of provider.

Click on “Continue,” and up comes the comparison of premiums for one’s chosen deductible for policies sold in one’s canton. Monthly and annual premiums of the various insurers are shown, along with the savings one could achieve by switching insurers.

A click on “request quote” leads to a page offering supplementary insurance for various items. A click on the “i” in green provides information on each supplementary benefit. Note that generous maternity benefits are included in the basic coverage and one can opt for additional services. (European men do not seem to view being forced to pay for maternity care an affront. At least one critic of the Affordable Care Act in the United States, on the other hand, has denounced inclusion of maternity benefits among the basic benefits as “Obamacare’s War on Men.”)

Swiss insurance exchanges seem quite simple and user friendly. Presumably, no one needs the assist of an insurance navigator to work through this Web site.

So why can’t the insurance exchanges under the Affordable Care Act be as simple as those in Switzerland? Why would it take almost three years to set up the American exchanges? And why will American buyers of health insurance need specially trained navigators to help them navigate these exchanges?

There are several reasons.

For one, the exchanges are but one small component of America’s highly complex health insurance system and must be stitched smoothly onto its many facets — a challenge that would be just as demanding for anyone proposing to move toward universal health insurance coverage through private insurers, even in the absence of deliberate attempts to sabotage the effort.

Swiss exchanges do not determine the public subsidies to which lower-income Swiss residents are entitled. These subsidies are handled by a different, cantonal authority. Therefore the Swiss exchanges do not have to determine eligibility for insurance. By contrast, in the United States, state-based exchanges must coordinate with the Internal Revenue Service to determine eligibility for subsidies and their magnitude.

The American exchanges must also work with the state-administered Medicaid programs, to determine whether an applicant on the exchanges should be referred to Medicaid, and with small employers.

Furthermore, some American exchanges will be “active” — they will actually negotiate premiums with insurers.

Finally, the Swiss exchanges need to feature premiums only for exactly the same health benefits. Individuals have a choice only over the deductible in the policy. The Affordable Care Act does specify the basic benefits that must be covered, which each state can translate into its own basic benchmark package. There will be four levels of covered benefits (bronze, silver, gold and platinum) that are likely to differ mainly by the degree of cost-sharing (deductibles, co-payments and co-insurance). But some variation of covered services around the state benchmark package nevertheless will be possible within the same actuarial value of a policy, adding some complexity.

Benefit packages on the American exchanges will also vary by the degree of choice among providers that different policies permit. Presumably, the exchanges will have to ascertain the adequacy of the networks of providers attached to particular policies.

In short, comparing the various offerings on the American exchanges will not be nearly as simple as it is on the Swiss exchanges; hence the need for the specially trained navigators.

Americans insist on choice and pluralism among insurance products, enabling them to find coverage they believe will fit their personal needs. That choice, desirable though it may be, comes at a stiff price, with two dimensions.

First, it adds considerably to monetary outlays on administrative functions, which in the United States run about twice per capita what they are in other countries. And to make careful and responsible choices takes a great deal of a person’s time.

Article source: http://economix.blogs.nytimes.com/2013/07/19/what-makes-u-s-health-insurance-exchanges-so-complicated/?partner=rss&emc=rss

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Today’s Economist: Policy Impact and Red Herrings

July 17, 2013 by Leave a Comment

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Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

Red herrings are frequently inserted into policy discussions but can be readily identified as long as we remember a simple truth about public policy impact.

Today’s Economist

Perspectives from expert contributors.

The impact of public policy on an economic outcome like employment is, by definition, the difference between employment with the policy in place and what employment would have been under an alternative “baseline” policy. Policy impact quantifies how things are different as a consequence of the policy.

Consider these statements:

“The Affordable Care Act will not reduce full-time employment because workers understand that full-time employment is the path to career advancement” (see my previous post).

“Unemployment insurance does not reduce employment because Americans fundamentally want to work and provide for themselves” (see, for example, this commentary on gawker.com)

These are all examples of red herrings, irrelevant statements that are attached to hypotheses.

Take the full-time employment example. It may be true that full-time employment is the path to career advancement, but that is hardly relevant to the Affordable Care Act as long as we assume that full-time employment would be that path regardless of whether we have that law.

That is, lots of people will choose full-time employment because of the career opportunities it provides, but they are counted as full-time employed under the policy and as full-time employed under the baseline policy (say, continuing as if the act had never become law). A policy impact estimate, by definition, counts only those for whom career advancement does not trump their decision to be in a full-time position.

As I explained in that an earlier post, the Affordable Care Act introduces funds and insurance opportunities for part-time employees that will be unavailable to most full-time employees. As long as there are more than zero people whose full-time vs. part-time work decision depends on funds or insurance, there is the potential for policy impact.

In my second example, it may be true that most people want to work and provide for themselves. But I assume motivation to work is the same regardless of whether unemployment benefits are paid for, say, 99 nine weeks or 26. What’s different between the 99-week policy and the 26-week baseline are the circumstances in which people find themselves.

As long as motivation is not the sole factor determining employment, there is the potential for unemployment insurance to have a policy impact, even in a country in which the people are fundamentally hard-working.

Nobody expects a government program to make everything different. So policy analysis is particularly useful in subtracting out the outcomes that would occur regardless of policy measures.

Article source: http://economix.blogs.nytimes.com/2013/07/17/policy-impact-and-red-herrings/?partner=rss&emc=rss

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You’re the Boss Blog: A Bakery Is Relieved to Have the Employer Mandate Delayed

July 16, 2013 by Leave a Comment

Rachel Shein: Courtesy of Baked in the Sun Rachel Shein: “I think most of my young and healthy workers won’t buy any insurance.”

Case Study

What would you do with this business?

With Congress pushing back an important start date for the Affordable Care Act, giving companies with 50 or more full-time employees an extra year before they are required to offer health insurance to their workers, we decided to check in with Rachel Shein and her wholesale bakery, Baked in the Sun.

In March, Ms. Shein and her bakery, based near San Diego, were featured in a case study that looked at what she would have to do to comply with the new health care law. With insurance companies still developing their offerings for businesses like hers, Ms Shein was delighted to learn that the employer mandate was being delayed. “I was thrilled when I heard we had the extra time to watch and wait,” she said.

At the time the case study was written, Ms. Shein had been quite concerned about the potential effects of the law’s implementation. “We saw it as a significant cost to our business, one we hadn’t built into our business model,” she said. Her participation in the case study led to appearances on several TV news programs, including on Fox Business and CNBC.

Initially, Ms. Shein estimated that she would have to pay $108,000 a year to include the 90 employees who are not currently covered by her company’s health insurance. Her insurance broker now believes that when the final rates are published for next year, the cost will be higher than that.

Ms. Shein, though, will have to pay for only those employees who sign up for the plan she offers, and so far, the plans she has seen have not seemed terribly attractive. One sample plan, she said, included a $4,500 deductible, which Ms. Shein said “is too high for low-wage workers, so my employees may be better off going to the state-run market for individuals, which seems to have more options and better prices.”

Insurance company offerings for businesses like hers are expected to evolve, Ms. Shein said, and she hopes better plans and choices become available, as they have on the individual exchange. Right now, Ms. Shein doesn’t know the final costs or how many of her employees will sign up, so she has not been able to  estimate her expenses with any confidence. “It’s still very messy,” she said.

The delay is an opportunity for both companies and employees, Ms. Shein said, because it gives business owners more time to shop around and workers can take the year to see what is available on the exchange before they decide if they will take company-offered insurance.

Ms. Shein is also interested to see if the managers who are covered by her company’s insurance plan find a better deal on the state-run market. For the rest of her employees, she said, “the individual penalty for not carrying insurance is still low, so unless some better options come out, I think most of my young and healthy workers won’t buy any insurance — either through me or the exchange.”

For now, she plans to focus on running her baking company. “The recession has made us more efficient,” she said. “We’ve automated more and focused on the most profitable parts of the business. I can’t control the insurance rates, but I can make a great espresso mocha scone.”

Article source: http://boss.blogs.nytimes.com/2013/07/16/a-bakery-is-relieved-to-have-the-employer-mandate-delayed/?partner=rss&emc=rss

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Economix Blog: Taxing Employers and Employees

July 10, 2013 by Leave a Comment

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Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

The delay of the Affordable Care Act’s employer mandate is a favorable development for the labor market, but the employer mandate is only the tip of the iceberg in terms of the labor-market distortions that the law has scheduled to come on line next year.

Today’s Economist

Perspectives from expert contributors.

The Affordable Care Act’s employer mandate will eventually levy a penalty on large employers that do not offer affordable health insurance to their full-time employees. The penalty is based on the number of full-time employees and adds about $3,000 to the annual cost of employing each person.

Employers have been complaining about the penalty, saying it will reduce the number of people they hire and cause them to reduce employee hours. Even economists and commentators supporting the law acknowledge that per-employee penalties reduce hiring by raising the cost of employment.

Economists have traditionally recognized that it hardly matters whether a tax is levied on employers or on employees, especially in the long run. In the employee-tax case, the employee pays the tax directly. In the employer-tax case, the employee pays the tax indirectly through reduced pay, because employer penalties reduce the willingness of employers to compete for people (Jonathan Gruber of the Massachusetts Institute of Technology has provided some good evidence in support of this widely accepted economic proposition).

Among other things, employment, employer costs and employee take-home pay would be essentially the same if the government levied a $3,000 fine on workers for having a full-time job with a large employer that does not offer health benefits, rather than levying the fine on employers on the basis of their full-time personnel, as the Affordable Care Act does.

But the political optics of the two policies are dramatically different. Large businesses can supposedly afford $3,000 per employee, while many employees could not afford another $3,000 bite out of their paychecks. Like it or not, economics’ equivalence results tells us employees will have to afford what amounts to a tax on them beginning in 2015, pursuant to the Treasury Department’s decision to begin collecting the employer penalty in that year.

For the purposes of understanding the state of the labor market, it doesn’t really matter whether individuals would be paying a tax for having a full-time job or receiving a subsidy for not having a full-time job. Either policy would reduce the gap between the income of full-time employees and everybody else. The ultimate result will be less full-time employment, in an amount commensurate with the size of the tax or subsidy.

The Affordable Care Act offers subsidies for people without work or in part-time positions that far exceed $3,000 per employee per year, which makes the employer mandate only a small piece of the law’s employment effects.

The law’s other new work-disincentive provisions, still on schedule for next year, include (i) a sliding income scale that sets premiums for people who buy health insurance on the new marketplaces, (ii) a plan for premium assistance that essentially resurrects the Recovery Act’s subsidy for what are known as Cobra benefits, allowing employees who have left a job to continue to participate, for a limited time, in their former employer’s health plan, in a more comprehensive form and (iii) hardship relief from the individual mandate.

As an example of these provisions, I explained last week how, even without the employer penalties, the premium assistance plan sharply penalizes full-time employment in favor of part-time employment. In combination, the provisions going into effect next year are two or three times larger than the employer mandate by itself, depending on the type of worker and the industry of employment.

Proponents of the Affordable Care Act, including a number of economists, have yet to acknowledge that so many provisions of the act have, from a labor economics perspective, so much in common with the employer mandate. But labor-market distortions are a common feature of several significant parts of the act and are an important part of what has happened in our labor market.

Whatever labor market benefits accrue from delaying the employer mandate could be had many times over by delaying the entire Affordable Care Act.

Article source: http://economix.blogs.nytimes.com/2013/07/10/taxing-employers-and-employees/?partner=rss&emc=rss

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Economix Blog: Putting Off the Employer Mandate

July 2, 2013 by Leave a Comment

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.

Well, I didn’t see that coming.  The Obama administration announced Tuesday afternoon that it was going to delay an important part of the Affordable Care Act for one year.  The rule requiring employers with at least 50 full-time workers to provide them with coverage or pay a penalty (also known as the employer mandate) will now be enforced starting in 2015, not 2014 as originally planned.

Here’s a very brief look at why, what, and what it means.

Today’s Economist

Perspectives from expert contributors.

A Treasury official published a blog post explaining that officials decided to give businesses more time to comply with the reporting requirements.  As The Times reported:

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark J. Mazur, an assistant Treasury secretary, wrote on the department’s Web site in disclosing the delay. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”

Though the mandate will ultimately affect only a few employers, it is actually an important piece of the law’s architecture.  Without it, employers who currently provide coverage to their workers could drop the coverage and send their workers over to the state health care exchanges.  And since some of those employees would be eligible for subsidies to help defray the cost, the employer would be shifting what is now a private cost over to the government.

The penalty for such actions was supposed to kick in next year; now they’ll kick in the year after next.  The government needs a bunch of information from businesses to determine if the penalty is warranted, and the White House is now saying that putting that reporting process in place is going to take longer than expected.

How will this affect coverage?  Hard to see it having much impact at all.  The important coverage aspects of the Affordable Care Act — the Medicaid expansion and the state health care exchanges — are still scheduled to be up and running by Oct. 1, the beginning of the fiscal year (of course, not every state has accepted the Medicaid part). And the requirement to have health insurance or pay a penalty – the individual mandate – will still take effect in 2014.

And a vast majority of employers with at least 50 full-time workers — about 95 percent — already offer coverage to the workers.  With the exchanges going up, there’s a chance some employers could try to pull off the cost shift noted above, but the mandate will be in place by 2015, so we’re unlikely to see much of that.

At least one report suggests a budgetary cost from the delay, since the revenues from penalties would flow to the Treasury Department.  But a colleague who tracks this stuff very closely tells me that while the Congressional Budget Office earlier this year scored this part of the bill as providing $5 billion to the Treasury next year, its most recent score dropped that to zero.  The budget office appears to have wisely assumed it was already going to take a while to get this part of the system up.

So, no budget cost, little impact on coverage.  Is this delay just not a big deal?

Um … this is Washington, folks, and we’re talking Obamacare.  There will be much hay made of this delay in coming days.  Conservatives will argue that this confirms that the law is unmanageable — which is a bit rich, since many of them have been trying to kill it, block it, and stop it in its tracks. (Speaker John Boehner’s press secretary, Brendan Buck, on Twitter: “Obamacare. Such a train wreck.”)  Liberals may argue that the administration is caving to business, which just wants to put off the paperwork for a year.

I think it’s an unfortunate delay of an important but relatively small piece of the bill, more growing pains of the type I’m sure Medicare had when it got going than anything existential. But that’s not how it will play in the hurly-burly of the next few days of Washington politics.

Article source: http://economix.blogs.nytimes.com/2013/07/02/putting-off-the-employer-mandate/?partner=rss&emc=rss

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Today’s Economist: Casey B. Mulligan: What Job-Sharing Brings

May 8, 2013 by Leave a Comment

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Casey B. Mulligan is an economics professor at the University of Chicago. He is the author of “The Redistribution Recession: How Labor Market Distortions Contracted the Economy.”

When employer costs are taken into account, it is unclear whether jobs are something that can be efficiently shared.

Today’s Economist

Perspectives from expert contributors.

The idea behind work-sharing is that employers have a certain amount of work that needs to be done, and that the work can be divided by many employees working a few hours each or a few employees working many hours each. If hours per employee could be limited, by this logic employers would have to hire more employees to get the same amount of work done.

American labor law has traditionally placed some limits on employee hours, such as overtime regulations. While the recent Affordable Care Act does not strictly limit hours per employee, beginning next year it gives employers a strong push toward part-time employment by levying a significant fee per full-time employee and exempting part-time employees from the fee.

A number of employers have said they would change some work schedules to part time from full time to avoid some Affordable Care Act fees. Because part-time workers generally have fewer benefits than full-time employees, this could save employers a considerable sum. From the work-sharing perspective, the part-time employee exemption by itself would be expected to increase employment, because employers would have to hire more people (probably on a part-time basis) to complete work their employees used to accomplish when full time.

But it is possible that work-sharing would reduce employment rather than increase it, because it prevents employers from accomplishing their tasks at minimum cost, adding administrative and coordination expenses. Higher costs for employers may put them out of business, or at least reduce the scale of their business. When companies reduce the scale of their activities, that means fewer employees.

It is also possible that work-sharing would reduce employment by making jobs less attractive to people who desire full-time work. One reason that people sometimes justify commuting long distances to work or enrolling in demanding training programs – trucking and nursing are two such occupations — is that they expect to recoup those cost by taking advantages of opportunities to earn extra by working long hours.

Work-sharing proponents have credited Germany’s comparative low unemployment rate to its adoption of a work-sharing program, because the program encourages German employers to reduce employee hours rather than lay workers off. Work-sharing proponents may be right, although Germany carried out a number of labor-market reforms at the same time, such as allowing businesses to use temporary workers more easily.

As the Affordable Care Act suddenly pushes business toward part-time employment, we economists will have an unusual opportunity to learn whether cutting employee hours creates jobs, or destroys them.

Article source: http://economix.blogs.nytimes.com/2013/05/08/what-job-sharing-brings/?partner=rss&emc=rss

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Economix Blog: Shorter Hours, but Not for Truckers and Temps

May 7, 2013 by Leave a Comment

CATHERINE RAMPELL

CATHERINE RAMPELL

Dollars to doughnuts.

One of the more disappointing data points in last Friday’s jobs report was the decline in average weekly hours worked, which fell to 34.4 hours in April from 34.6 hours in March. It’s not clear what was behind the decline, which occurred in multiple industries across the private sector. (The monthly jobs report does not include the length of the workweek for government workers.)

In a note to clients, Paul Ashworth, chief United States economist at Capital Economics, observed that hours in the retail sector had trended down for the last year, though the numbers had been noisy month-to-month.

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change.

“The relatively poor performance of average hours worked in the retail sector looks odd when we consider that the gains in retail employment in the second half of last year were unusually strong,” he writes. “Normally, we would expect employment and hours worked to be going in the same direction.”

There are different ways to interpret this. One is that, as Mr. Ashworth notes, retailers might be increasingly relying on part-time help to avoid an Affordable Care Act provision that requires businesses with at least 50 full-timers to provide health insurance or pay a penalty (a requirement that kicks in next year, but is based on employment levels this year).

Blessed with more data on their customers, businesses may also be hewing more closely to the idiosyncrasies of consumer demand and staying open longer — and it’s easier to schedule a staff for longer hours of operation if individual employees are working in shorter shifts, according to Peter Cappelli, a management professor at the Wharton School of the University of Pennsylvania.

Strangely enough, food services and drinking establishments, which are among those making the most noise about the Affordable Care Act employer mandate, do not seem to have cut down their hours in recent months. That may be because workers in this sector already work relatively short hours (25.6 weekly hours on average for the latest month of data, versus 31.4 weekly hours in retail), Mr. Ashworth says.

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change.

Not all sectors have been paring back hours.

Truck transportation, which has been raising compensation for its workers, has also been expanding their weekly hours:

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change.

And perhaps most strikingly, hours for temp workers have also increased over a different time horizon — not over the last few months, but over the last few years. Temp workers now put in more hours than they did during the prerecession boom years, and their average workweek is now longer than that for the overall private sector. Historically, these provisional workers logged fewer hours than their permanent counterparts.

Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change. Source: Bureau of Labor Statistics, via Haver Analytics. Note that the vertical axis does not start at zero to better show the change.

These trends may speak to employers’ continued reluctance to make the commitment to permanent hires, even as demand picks up.

Article source: http://economix.blogs.nytimes.com/2013/05/07/shorter-hours-but-not-for-truckers-and-temps/?partner=rss&emc=rss

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You’re the Boss Blog: Bakery Owner Talks About Coping With Health Insurance Changes

March 26, 2013 by Leave a Comment

Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.Sandy Huffaker for The New York Times Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.

Case Study

What would you do with this business?

Last week, we published a case study about Baked in The Sun, a wholesale bakery and distributor that is trying to decide how best to comply with the Affordable Care Act. Starting in January, the new law requires businesses with 50 or more full-time employees to offer health insurance or pay a penalty. Owned by Rachel Shein and Steve Pilarski, husband and wife, the company employs nearly 100 workers to bake and deliver freshly made pastries to coffee shops, hospitals and hotels in Southern California.

Baked in the Sun has offered health insurance to its employees in the past but many are young and healthy and have preferred to keep more money in their paycheck, rather than contribute to a health plan. Soon, though, almost all workers will have to carry health insurance — through their employer, a government exchange or other source — or pay a penalty. And, as the case study discussed, Ms. Shein and Mr. Pilaski are trying to decide whether they will offer health insurance, pay a penalty or outsource enough work that they can reduce their head count below 50 and be exempt from the law.

The article elicited lots of comments and strong opinions, as well as reports in other media outlets, including CNBC, which included Ms. Shein in a panel discussion about her company’s situation. Some readers argued that Baked in the Sun has a moral obligation to offer coverage. Others argued for a single-payer system that would allow owners to stop worrying about health insurance and focus on running their businesses.

Andrew Greenblatt, a senior vice president at Benestream, which helps low wage employees apply for government benefits, pointed out that under the Affordable Care Act, Medicaid has been expanded to cover families earning up to 138 percent of the poverty level, which means that workers who make minimum wage, especially single parents, may qualify.

And Alan Cohen, chief strategy officer for Liazon, a private insurance exchange for companies, suggested in a comment that many employees will be better off if the bakery chooses not to offer insurance and instead pays the government penalty. That’s because the employees would be likely to qualify for a subsidy at a government exchange that would allow them to insure their whole family — but only if their employer does not offer health insurance.

Of course, because neither the minimum level of coverage, nor the costs to all the insurance options have been finalized, lots of uncertainty remains. We contacted Ms. Shein for a follow-up conversation that has been condensed and edited.

A number of readers suspect that you are underestimating how much it would actually cost to insure your employees. Have you taken another look?

The insurance plans are still under development. My broker recently found one that was less than what I had found, but I’m not sure anyone knows what the final rules and prices will be.

Have you thought any further about how many of your employees will actually sign up for insurance if you offer it?

In the short run, when the individual penalty is low, there might not be much participation. We plan to have a meeting with our employees to see what kind of insurance they might want and which of them might be covered elsewhere.

Did this discussion have any impact on your thinking about whether you will pay the penalty or offer insurance?

The employees will all have access to health insurance whether we provide it, or we pay the penalty and they purchase it using a subsidy on the government exchange. We need to look at all the costs and tax implications and do whichever is least expensive for the business.

Are there any reader questions you want to answer?

Some readers claimed it was a moral imperative to provide insurance — but all employees will have insurance under the law.

Some readers thought your profit margin was too low and questioned how well your business was doing. What was your reaction?

Like many entrepreneurs we have great years where we can take vacations and put money into our kids’ college funds. Some years are leaner.

Do you think your customers would pay a few more cents for your baked goods — especially if it allows you to offer your employees health insurance?

Our products are unbranded and sold in hundreds of outlets so it would be hard to educate consumers about our employment practices. And the popularity of Wal-Mart shows that most consumers just want the best price.

You suggested in the article that you might have to raise your prices 4 percent to cover the cost of providing health insurance. But 4 percent of $8 million — your annual revenue — is $320,000. That’s a lot more than you estimated the cost of insurance. Couldn’t you just raise your prices 2 percent?

Yes, a 2- to 3-percent increase could cover the costs, but it’s a low margin business and pennies matter so we like to build in some buffer.

Would you favor a single-payer system?

I am in favor of a system that doesn’t penalize a business for being successful and able to hire more than 50 people and doesn’t deter us from wanting to grow. I am in favor of a system where everyone pays in, and everyone is covered. If that is a single-payer system, I’m for that.

Article source: http://boss.blogs.nytimes.com/2013/03/26/bakery-owner-talks-about-coping-with-health-insurance-changes/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,

You’re the Boss Blog: Should a Bakery With More Than 50 Employees Offer Health Insurance?

March 20, 2013 by Leave a Comment

Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.Sandy Huffaker for The New York Times Rachel Shein, center, is trying to figure out how to comply with the new health insurance law.

Case Study

What would you do with this business?

We just published a case study about Baked in the Sun, a wholesale bakery and distributor trying to decide how best to comply with the Affordable Care Act, which requires businesses with 50 or more employees to offer health insurance or pay a penalty. The company, owned by Rachel Shein and Steve Pilarski, who are married, started out making scones 16 years ago and expanded with the growth of coffeehouses. Baked in the Sun now produces nearly 200,000 items per day — almost 200 different products, including brownies, coffee cakes, muffins and cookies — and employs nearly 100 people in San Marcos, Calif.

Ms. Shein, who is chief executive, needs to decide if the owners will provide health insurance, which they estimate will cost up to $108,000 per year, or pay the penalty, which they estimate will cost $130,000. One benefit of paying the penalty is that the company would not have to take on the burden or expense of managing the insurance plan, which Ms. Shein estimates would take $10,000 of staff time. She is also considering a third option: outsourcing certain jobs to reduce staff. That is because businesses with 50 or fewer employees will be exempted from the law. It is important for Ms. Shein to make a decision soon on staffing levels because the number of full-time workers a business employs in 2013 will determine its status in 2014. Ms. Shein said she believes all workers should have health insurance, and she and her husband have offered it to employees in the past, but most are young and healthy and have not been receptive to plans that require them to contribute.

Below, you will find the recommendations of a tax accountant, an economist and another baker. Please use the comment section to tell us whether you agree or disagree with their advice — and to offer your suggestions for Ms. Shein and Mr. Pilarski. Next week, we will publish a follow-up.

John G. Ebenger, an accountant in the tax practice of Berkowitz Pollack Brant Advisors and Accountants in Miami: “It is a challenging situation, especially since the details have not been fully worked out. The bakery could opt to bite the bullet and pay the penalty next year, with plans to revisit the types of insurance that become available in 2014. With a year to plan, insurance companies will come up with more options for employers.”

Jonathan Gruber, an economics professor at M.I.T. who advised the Obama administration on health care reform: “Rachel and Steve face a difficult decision, but it seems that the third option to reorganize production and outsource functions to end up with fewer than 50 workers will be too expensive to make much sense. Offering insurance won’t cost much more than the penalty, and in an industry where many of their competitors don’t offer insurance, they could advertise themselves as a better place to work.”

Jody Hall, owner of Cupcake Royale, with 80 employees in Seattle, and a leader of the Main Street Alliance, a national network of state-based small-business groups: “I’d recommend offering health care insurance for full-time employees, like we do at Cupcake Royale, as part of our responsibility to help strengthen the health of our employees, our community, and our business. Ms. Shein is probably overestimating her costs because not all employees will use the health insurance she offers. At our bakery only about half our employees use the health insurance we provide. Some are under 26 and covered by parents, others have spouses with coverage, and some just choose not to take it. Small businesses like mine who have been offering health care will be better off when all businesses are paying into the system because the cost increases will slow down.”

What do you think?

Article source: http://boss.blogs.nytimes.com/2013/03/20/should-a-bakery-with-more-than-50-employees-offer-health-insurance/?partner=rss&emc=rss

Filed Under: Small Business Tagged With: , ,
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