February 25, 2014
As ordered reported by the House Committee on Ways and Means on February 4, 2014
H.R. 2575 would alter the calculation of the number of full-time equivalent employees for the purposes of determining which employers are subject to penalties under the Affordable Care Act (ACA) for not offering health insurance for their employees or for offering insurance that does not meet certain criteria specified in the law. In addition, the legislation would change the definition of “full-time employee” used for the calculation of those penalties. Specifically, the bill would raise the threshold that defines full-time employment from 30 hours per week under current law to 40 hours per week.
Those changes to the employer responsibility requirements of the ACA would reduce the number of employers assessed penalties and lower the penalties assessed against employers that do not offer insurance (or offer insurance that does not meet certain criteria) and that have at least one full-time employee receiving a subsidy through a health insurance exchange. As a result, the largest budgetary effect of H.R. 2575 would be to reduce the amount of penalties collected from employers.
As a result of those changes in who would pay penalties and what amounts they would have to pay, CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting H.R. 2575 would change the sources of health insurance coverage for some people. Specifically, in most years over the 2015-2024 period, CBO and JCT estimate that the legislation would:
- Reduce the number of people receiving employment-based coverage—by about 1 million people;
- Increase the number of people obtaining coverage through Medicaid, the Children’s Health Insurance Program (CHIP), or health insurance exchanges—by between 500,000 and 1 million people; and
- Increase the number of uninsured—by less than 500,000 people.
As a consequence of the changes in penalties and in people’s sources of insurance coverage, CBO and JCT estimate that enacting H.R. 2575 would increase budget deficits by $25.4 billion over the 2015-2019 period and by $73.7 billion over the 2015-2024 period. The 2015-2024 total is the net of an increase of $83.0 billion in on-budget costs and $9.3 billion in off-budget savings (the latter attributable to increased revenues). Pay-as-you-go procedures apply because enacting the legislation would affect direct spending and revenues.
JCT has determined that H.R. 2575 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.