About 30 years ago, we were expanding our transportation company (which was related to our health care business) in California.   And, given our philosophy of looking for folks who needed a helping hand, we hired two folks whom we trained to become truck drivers for our firm. They both worked 20 hours a week to start.  Once they acquired enough hours to take the tractor-trailer license test (and passed), we began using them for 35 to 42 hours a week.  When, all of a sudden, one of the drivers announced he was quitting.

We were mildly (ok, greatly) annoyed, having spent a fair amount of time and money training this person.  So, we had a lengthy discussion as to his reasons. You see, this fellow was a fourth generation recipient of welfare.  And, as a single parent, the State of California was now about to terminate his child care.  Because he would be making $ 25,000 (or more)- not the $ 10,000 a year he had been making up to this point.

We spent about two weeks negotiating with the various agencies, explaining how this rigid policy was counter-productive.  Because after he worked for us for another 6 months, he could afford his own childcare (and would also have healthcare insurance as part of his compensation, which was another perk the authorities were ready to strip from his benefits).

They eventually agreed with us, to some degree, changing his “drop dead” date to four months of employment (when his health care had cut in).  And, he stayed a faithful employee for two more years, when he moved to a new location.

This same factor is about to play out all over America due to the peculiar wording of some of the Obamacare provisions.  A father of two (with spouse) will probably not consider taking a higher paying job, because he will have his health care subsidy stripped away.

You see, this family is entitled to a $10K subsidy on healthcare costs.  Which means taking a higher paying job (say $ 42K, versus $ 36K, which is just at the cut-off) would mean the immediate termination of the subsidy. Some employers may also decide (as many have already done with impunity) to convert low paying positions to part-time offerings.  Because in so doing, they would not be subject to employer mandated penalties if health insurance were not part of their compensation package- or that their health care plan is simply inadequate (many firms do not offer useful   benefits).    These penalties are $100 per day per affected employee.  Which means, that US taxpayers will be forced to provide for the subsidies to these lower paid employees.

There are a few other bizarre situations.  One where the employer provides insurance benefits for employees only- and sets the cost for the rest of the family at prohibitive levels (and not subject to subsidies).  So, the family may consider alternative living arrangements (like divorce) to render the health care situation for the rest of the family more affordable. Of course, these situations only apply for certain income levels.  As one’s wages rise, the penalties and subsidies are very different.  The process is not really much different when that extra $ 100 in pay subjects a taxpayer to a much higher marginal rate.   And, one hopes that these situations will be addressed in the corrective regulations being developed.

(Remember, Obamacare was clearly regarded as a first-pass.  Everyone knew that tweaking was going to be required.  Just like Social Security had changes made in its first four years.)

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