News: CJ Exclusives

Local Governments, Colleges Confront Obamacare Mandates

Impacts expected to be widespread in 2015

With a few notable exceptions, government agencies in North Carolina do not expect a major hit from Obamacare mandates in the coming year. But that could change in 2015, when large employer requirements kick in for organizations such as the UNC system, where as many as 10,000 temporary employees could be affected.

Carolina Journal queried 100 municipalities, counties, community colleges, and public universities to determine the Affordable Care Act’s anticipated effects on their budgets, operations, and staffing. Of the 21 agencies that responded, some said it is still too early to know; many said part-time workers are the most likely to face consequences.

Because Obamacare lowered the definition of full-time employees to those working 30 hours or more, public agencies must decide whether to cut part-timers’ hours below 30 to avoid a mandate to pay their insurance (creating a need to hire more part-time workers), or to absorb higher insurance costs by adding these employees to their coverage.

“We don’t have firm data on the number of employees who might be impacted across the university,” Joni Worthington, vice president for communications with the UNC System, said in a written response to a set of questions from CJ.

“An informal survey conducted last fall, however, suggested it could impact up to 10,000 temporary employees,” Worthington said. That would comprise 3,000 adjunct faculty members and 7,000 staff employees.

“The ACA is an unfunded mandate, and campuses will receive no additional funding to provide the required health care coverage,” Worthington said.

UNC General Administration has no plans to cap employees’ hours to avoid Obamacare’s health coverage requirements. Campuses may have adjuncts teach as many hours as needed, Worthington said.

“It could have — quite significant for us — a budgetary impact on the college,” said Randy Parker, spokesman at Guilford Technical Community College. Complying with law changes “has created a lot of angst for us.”

The college likely will cut some adjunct professors’ hours rather than add them to the insurance plan. Because course demands will remain steady, the college will need to hire more adjunct professors, who teach part-time, to fill the gap, Parker said.

There are 21 colleges and universities within driving distance in the Triad, Parker said. Many are considering the same strategy, and that is “creating some challenges for all of us in finding enough faculty.”

Some adjunct staff also work part-time in other campus offices and may need to be shifted onto the health care plan, Parker said. It could be necessary for GTCC to hire full-time staff to monitor the hours of its part-time workers across its five campuses to ensure they remain under the new 30-hour “full-time” designation, Parker said.

Megen Hoenk, spokeswoman for the North Carolina Community College System, said community colleges essentially, “are all making decisions locally on how to comply … given their own individual circumstances.”

She said colleges are still working out how they’re going to handle any impacts.

Najuma Thorpe, spokeswoman for the North Carolina League of Municipalities, said the league’s risk management services director told her “it is a little bit too early to say where this is going with regard to our members.”

Most municipalities have fewer than 50 employees, “and some will need to measure the seasonal and part-time hours just in case this results in full-time equivalents, whereby they hit the 50-employees threshold,” Thorpe said.

Small companies, identified as those with fewer than 50 employees, are exempt for now from the Obamacare mandate to provide their workers with insurance.

“Most are taking a wait-and-see attitude regarding the public exchanges,” Thorpe said. Those electronic marketplaces sell the coverage plans approved by the federal government as compliant with Obamacare mandates.

Greenville City Manager Barbara Lipscomb said the city plans no employee cuts or reduction in services due to the Affordable Care Act.

But Lipscomb said Obamcare’s mandates contributed about 3 percentage points of an anticipated 8- to 10-percent increase in the city’s 2014 health insurance costs.

Todd McGee, director of public relations at the North Carolina Association of County Commissioners, said he’s heard nothing concrete about any actions planned by the state’s 100 counties.

“We have not experienced or initiated cutbacks or reductions to our employee work force as a result of the Affordable Care Act requirements,” said Onslow County Manager Jeff Hudson.

Incorporating Obamacare mandates such as expanding coverage for dependents up to age 26, providing preventative care at no out-of-pocket cost to patients, removing lifetime or annual coverage limits, and not excluding members with pre-existing conditions created an increase in costs “estimated to be below 2 percent of the total cost for the Onslow County employee health plan,” Hudson said.

Amanda Hutcheson, Brunswick County public information officer, said there have been no layoffs, reduction in hours, or elimination of programs to comply with Obamacare, but insurance costs will escalate due to the law’s mandates for additional coverage.

Increasing preventive services for women’s health care will cost $86,105 each of the next two years. The transitional reinsurance fee designed to help fund the Obamacare exchanges will cost $123,624 each of the next two years. The Patient-Centered Outcomes Research Institute fee will cost $209,729 this fiscal year and $211,479 in 2014-15.

Durham Assistant County Manager Deborah Craig-Ray said Durham County “had to make very few changes to its health benefit to comply with Affordable Care Act requirements” because the county’s plan offer benefits similar to those in Obamacare-compliant policies.

She said “the county’s plan has included coverage for Essential Health Benefits, co-pay-free preventive services, coverage for adult children up to the age of 26, and no pre-existing condition exclusions for a number of years. … Part-time employees who work a minimum of a 50 percent work schedule are already benefits eligible, and at this time will continue to be eligible. The county has made no changes to its retiree benefits.”

School districts may have dodged the Obamacare bullet at this point.

“The health coverage for employees is provided by the state. If there is discussion among school finance officers, I’m not aware of it, and I’ve not heard any discussion of it by the school board members,” said Ed Dunlap, executive director of the North Carolina School Boards Association.

Community colleges are faced with the same IRS part-time employee conundrum as the UNC System. A typical response from community college officials came from Janet Burnette, executive vice president and chief financial officer of Southwestern Community College in Sylva.

“While we are still evaluating our options, it appears that we will have to limit the hours that we allow part-time employees to work,” Burnette said. “We simply do not have the funding to cover the costs of providing insurance for these employees.”

Responses from other government agencies clustered around several reactions to Obamacare.

• Little or no impact: City of Goldsboro, City of Wilson, Durham Technical Community College, Halifax Community College.

• Monitoring hours of part-time employees: Robeson County, Central Piedmont Community College, Southeastern Community College.

• Reducing hours of adjunct faculty members: Cleveland Community College, Fayetteville Technical Community College, Randolph Community College.

• Adding part-time employees: Craven Community College.

• Reviewing staffing policies or unsure: Coastal Carolina Community College, Davidson County Community College, Robeson Community College.

Dan Way is an associate editor of Carolina Journal.