ObamaCare’s supporters defend the law because it is supposed to expand health insurance coverage to more people upon its implementation, partly through employer provided health insurance. Full-time employees, however, are finding reason to disagree with this defense. According to the Orlando Sentinel, Darden Restaurants- which owns restaurant retail giants like Olive Garden and Red Lobster, and currently provides health insurance for 158,000 full time employees- is preparing to weather an ObamaCare requirement that increases the price of full-time employees by replacing full-time with part-time employees.
ObamaCare requires employers to insure full-time employees with “minimum essential coverage,” or else pay a $3,000 fine for each full-time employee. Under ObamaCare, a full time employee works 30 or more hours per week. “Minimum essential coverage”, as defined by Health and Human Services, may be far more expensive for employers than the insurance they currently provide.
To cope with the costs of this regulation, Darden Restaurants has begun laying off full-time workers in several markets. Darden is also stringently monitoring the hours worked by its employees to keep them from exceeding ObamaCare’s 30 hour per week threshold for full time employment. Darden restaurants have even started distributing paper slips to remind many employees to stop working before they hit 30 hours to avoid ObamaCare’s costly penalty.
In imposing this regulation, ObamaCare’s authors perversely incentivized employers to stop hiring full-time employees. The health coverage required by ObamaCare, or the fine imposed for providing coverage below “minimum essential coverage,” is a costly regulation. Businesses have the incentive to avoid costly regulations in order to retain more of their earnings. Employees benefit from these earnings in the form of compensation such as wages, and until ObamaCare, perhaps, health insurance coverage.
By drastically increasing the price of compensating full time workers, ObamaCare has pressured businesses into hiring workers part time. This means less health insurance is being provided by employers, contrary to what ObamaCare’s supporters would want. A better alternative would be to let businesses offer health insurance coverage that they believe will best draw the employees they need, and in turn, let employees choose to work for employers that provide the health insurance they want. Better still, equalize the tax benefit between individuals and employers so that individuals can purchase the insurance they choose without government interference.
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