House GOP Kicks Off New Congress with Fiscal Irresponsibility

The 114th Congress has barely even started and House Republicans are already proposing to explicitly ignore pay-as-you-go (PAYGO) rules that require deficit-increasing policies to be offset with other deficit reduction. The "Save American Workers Act of 2015" would change the definition of full-time work from 30 to 40 hours for purposes of enforcing the ACA’s employer mandate, which the Congressional Budget Office (CBO) projects will add $53 billion to the debt over the next ten years.

The bill attempts to reduce the incentive within the employer mandate to reduce part-time workers' hours below the current 30-hour threshold in order to avoid penalties. Additionally, the legislation could be seen as a way to minimize the impact of the employer mandate by applying it to less firms and workers.

The cost primarily stems from significantly fewer penalties ($55 billion over ten years) being collected from employers in violation of the mandate to provide their employees with health coverage. The new workweek definition would both reduce the number of full-time-equivalent employees (FTEs) a company is deemed to have in many cases – thus reducing the number of companies meeting the minimum 50 FTEs necessary to be subject to the mandate – and by exempting employers from any penalties for employees working between 30 and 40 hours per week.

CBO also expects this bill to reduce the amount of people receiving employer-based health coverage by roughly one million, with at least half and possibly all of them instead receiving coverage through an ACA exchange, Medicaid, or CHIP. As a result, this policy change would increase the number of uninsured by less than 500,000.

Shifting people out of employer-based coverage and onto federal programs would have two offsetting effects on the debt. First, employers would offer higher wages in place of health coverage, increasing federal income and payroll revenue by $25 billion. Second, federal subsidies for coverage through the ACA exchanges ($16 billion) and Medicaid/CHIP ($8 billion) would increase the deficit by $24 billion.

Source: CBO.

The $53 billion cost of the bill, on net, would be exempted from PAYGO and charged to the nation's credit card. Cherry-picking which policies do not need to be paid for defeats the whole purpose of pay-as-you-go rules.

Instead, lawmakers should work to identify offsetting policies to prevent an increase in the debt, if they wish to pursue this bill. Offsets could come from within the ACA or anywhere else in the budget.

Hopefully such fiscal irresponsibility is not a harbinger of this Congress’ approach to the ACA and other issues.