```

[House Report 113-386]
[From the U.S. Government Publishing Office]

113th Congress  }                                            {   Report
  2d Session    }        HOUSE OF REPRESENTATIVES            {  113-386

=======================================================================

 
                   SAVE AMERICAN WORKERS ACT OF 2014 

                                _______
                                

 March 26, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

Mr. Camp, from the Committee on Ways and Means, submitted the following

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 2575]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Ways and Means, to whom was referred the 
bill (H.R. 2575) to amend the Internal Revenue Code of 1986 to 
repeal the 30-hour threshold for classification as a full-time 
employee for purposes of the employer mandate in the Patient 
Protection and Affordable Care Act and replace it with 40 
hours, having considered the same, report favorably thereon 
with an amendment and recommend that the bill as amended do 
pass.

                                CONTENTS

                                                                   Page
  I. Summary and Background...........................................2
          A. Purpose and Summary.................................     2
          B. Background and Need for Legislation.................     2
          C. Legislative History.................................     3
 II. Explanation of the Bill..........................................4
          A. Repeal of 30 Hour Threshold for Classification as 
              Full Time Employee for Purposes of the Employer 
              Mandate in the Patient Protection and Affordable 
              Care Act and Replacement with 40 Hours.............     4
III. Votes of the Committee...........................................7
 IV. Budget Effects of the Bill.......................................8
          A. Committee Estimate of Budgetary Effects.............     8
          B. Statement Regarding New Budget Authority and Tax 
              Expenditures Budget Authority......................    10
          C. Cost Estimate Prepared by the Congressional Budget 
              Office.............................................    10
          D. Macroeconomic Impact Analysis.......................    18
  V. Other Matters To Be Discussed Under the Rules of the House......20
          A. Committee Oversight Findings and Recommendations....    20
          B. Statement of General Performance Goals and 
              Objectives.........................................    21
          C. Information Relating to Unfunded Mandates...........    21
          D. Applicability of House Rule XXI 5(b)................    21
          E. Tax Complexity Analysis.............................    21
          F. Congressional Earmarks, Limited Tax Benefits, and 
              Limited Tariff Benefits............................    21
          G. Duplication of Federal Programs.....................    22
          H. Disclosure of Directed Rule Makings.................    22
 VI. Changes in Existing Law Made by the Bill, as Reported...........22
VII. Dissenting Views................................................24

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Save American Workers Act of 2014''.

SEC. 2. REPEAL OF 30-HOUR THRESHOLD FOR CLASSIFICATION AS FULL-TIME 
                    EMPLOYEE FOR PURPOSES OF THE EMPLOYER MANDATE IN 
                    THE PATIENT PROTECTION AND AFFORDABLE CARE ACT AND 
                    REPLACEMENT WITH 40 HOURS.

  (a) Full-Time Equivalents.--Paragraph (2) of section 4980H(c) of the 
Internal Revenue Code of 1986 is amended--
          (1) by repealing subparagraph (E), and
          (2) by inserting after subparagraph (D) the following new 
        subparagraph:
                  ``(E) Full-time equivalents treated as full-time 
                employees.--Solely for purposes of determining whether 
                an employer is an applicable large employer under this 
                paragraph, an employer shall, in addition to the number 
                of full-time employees for any month otherwise 
                determined, include for such month a number of full-
                time employees determined by dividing the aggregate 
                number of hours of service of employees who are not 
                full-time employees for the month by 174.''.
  (b) Full-Time Employees.--Paragraph (4) of section 4980H(c) of the 
Internal Revenue Code of 1986 is amended--
          (1) by repealing subparagraph (A), and
          (2) by inserting before subparagraph (B) the following new 
        subparagraph:
                  ``(A) In general.--The term `full-time employee' 
                means, with respect to any month, an employee who is 
                employed on average at least 40 hours of service per 
                week.''.
  (c) Effective Date.--The amendments made by this section shall apply 
to months beginning after December 31, 2013.

                       I. SUMMARY AND BACKGROUND

                         A. Purpose and Summary

    H.R. 2575 would, for purposes of the employer mandate 
established under the Patient Protection and Affordable Care 
Act (``PPACA''), repeal the 30-hours-per-week definition of 
full-time employee and the 120-hours-per-month definition of 
full-time equivalents, replacing those respective thresholds 
with 40-hours-per-week for full-time employees and 174-hours-
per-month for full-time equivalents.

                 B. Background and Need for Legislation

    The majority of employers that voluntarily provide health 
coverage for their employees do so for their full-time 
employees, and most adopt 40 hours a week as the standard 
definition for full time, consistent with Federal overtime 
rules. This system successfully provides coverage for nearly 
160 million Americans--by far the largest source of health 
coverage in America.
    Employers and employees have adapted to a system where 
health benefits are voluntarily offered to full-time employees 
and rarely offered to part-time employees. According to 
research from the payroll benefits firm ADP, for large firms, 
88% of full-time employees are eligible for benefits, while 
only 15 percent of part-time workers are offered health 
insurance. Since health benefits are a component of total 
compensation, providing coverage for part-time workers is cost-
prohibitive for employers, and part-time employees tend to 
value cash compensation over health benefits.
    The employer mandate and the 30-hour rule within section 
4980H of the Internal Revenue Code of 1986, as established 
under PPACA, disrupt this successful system. The 30-hour rule, 
in particular, forces employers who have been providing 
coverage--in some cases for decades--to alter their benefit 
plans, drop coverage, or shift more of their workforce to part 
time to mitigate the effects of the mandated cost increases.
    Industries that employ lower-skill workers, and often 
provide entry-level opportunities for younger workers, are 
disproportionately affected by the 30-hour rule. Recent Hoover 
Institution research concluded:
           The 30-hour rule puts 2.6 million workers 
        with a median income of under $30,000 at risk for 
        losing jobs or hours;
           89 percent of workers affected by the rule 
        do not have college degrees; and
           63 percent are women, and over half have a 
        high school diploma or less.
    There are widespread reports of employers reducing the 
number of hours for their workforces to below 30 hours to 
avoid, or at least mitigate, the penalty taxes associated with 
the employer mandate. Additionally, school districts, community 
colleges, and universities have reduced work hours for 
students, adjunct professors, and support staff.
    On July 2, 2013, the Obama Administration delayed 
enforcement of the employer mandate, and therefore the 30-hour 
rule, until 2015. Despite the delay, employers have already 
begun to respond to the mandate. According to the U.S. Chamber 
of Commerce survey of small business executives, 71 percent of 
small businesses believe the health care law makes it harder to 
hire. Additionally, one-half of small businesses report that 
they will either cut hours to reduce full-time employees, or 
replace full-time employees with part-timers to avoid the 
employer mandate.

                         C. Legislative History

                               BACKGROUND

    H.R. 2575 was introduced on June 28, 2013, and was referred 
to the Committee on Ways and Means.

                            COMMITTEE ACTION

    The Committee on Ways and Means marked up H.R. 2575, the 
Save American Workers Act of 2014, on February 4, 2014, and 
ordered the bill, as amended, favorably reported (with a quorum 
being present).

                           COMMITTEE HEARINGS

    The problems associated with the employer mandate were 
discussed at four hearings during the 113th Congress:
           Oversight Subcommittee hearing on the Tax-
        Related Provisions in the President's Health Care Law 
        (March 5, 2013);
           Health Subcommittee hearing on the Delay of 
        the Employer Mandate (July 10, 2013);
           Health Subcommittee hearing on the Delay of 
        the Employer Mandate Penalties and Reporting 
        Requirements (July 17, 2013); and
           Full Committee hearing on the Impact of the 
        Employer Mandate's Definition of Full-time Employee on 
        Jobs and Opportunities (January 28, 2014).

                      II. EXPLANATION OF THE BILL

A. Repeal of 30-Hour Threshold for Classification as Full-Time Employee 
  for Purposes of the Employer Mandate in the Patient Protection and 
           Affordable Care Act and Replacement With 40 Hours

                              PRESENT LAW

In general

    Under PPACA,\1\ as amended by the Health Care and Education 
Reconciliation Act of 2010\2\ (generally referred to 
collectively as the ``Affordable Care Act'' or ``ACA''), an 
applicable large employer may be subject to a tax, called an 
``assessable payment,'' for a month if one or more of its full 
time employees is certified to the employer as receiving for 
the month a premium assistance credit for health insurance 
purchased on an American Health Benefit Exchange or reduced 
cost-sharing for the employee's share of expenses covered by 
such health insurance.\3\ (This is sometimes referred to as the 
employer shared responsibility requirement.) As discussed 
below, the amount of the assessable payment depends on whether 
the employer offers its full-time employees and their 
dependents the opportunity to enroll in minimum essential 
coverage under a group health plan sponsored by the employer 
and, if it does, whether the coverage offered is affordable and 
provides minimum value.
---------------------------------------------------------------------------
    \1\Pub. L. No 111-148, enacted March 23, 2010.
    \2\Pub. L. No. 111-152, enacted March 30, 2010.
    \3\Sec. 4980H, added to the Code by section 1513 of PPACA and 
amended by 10106 of PPACA and section 1003 of the Health Care and 
Education Reconciliation Act of 2010. (Unless otherwise stated, all 
section references herein are to the Internal Revenue Code of 1986, as 
amended.) An applicable large employer is also subject to annual 
reporting requirements under section 6056. Premium assistance credits 
for health insurance purchased on an American Health Benefit Exchange 
are provided under section 36B. Reduced cost-sharing for an 
individual's share of expenses covered by such health insurance is 
provided under section 1402 of PPACA. For further information on these 
provisions, see Part III.B-D of Joint Committee on Taxation, Present 
Law and Background Relating to the Tax-Related Provisions in the 
Affordable Care Act (JCX-6-13), March 4, 2013, available on the Joint 
Committee of Taxation website at www.jct.gov.
---------------------------------------------------------------------------
    Under the ACA, these rules are effective for months 
beginning after December 31, 2013. However, the Internal 
Revenue Service (``IRS'') has announced that no assessable 
payments will be assessed for 2014.\4\ On February 10, 2014, 
the Department of the Treasury and the IRS issued final 
regulations on the employer shared responsibility requirement 
and announced that no assessable payments for 2015 will apply 
to applicable large employers that have fewer than 100 full-
time employees and full time equivalent employees and meet 
certain other requirements.\5\
---------------------------------------------------------------------------
    \4\Notice 2013-45, 2013-31 I.R.B. 116, Part III, Q&A-2.
    \5\Section XV.D.6 of the preamble to the final regulations, 79 Fed. 
Reg. 8544, 8574-8575, February 12, 2014.
---------------------------------------------------------------------------

Definitions of full-time employee and applicable large employer

    For purposes of applying these rules, full-time employee 
means, with respect to any month, an employee who is employed 
on average at least 30 hours of service per week. Hours of 
service are to be determined under regulations, rules, and 
guidance prescribed by the Secretary of the Treasury, in 
consultation with the Secretary of Labor, including rules for 
employees who are not compensated on an hourly basis.
    Applicable large employer generally means, with respect to 
a calendar year, an employer who employed an average of at 
least 50 full-time employees on business days during the 
preceding calendar year.\6\ Solely for purposes of determining 
whether an employer is an applicable large employer (that is, 
whether the employer has at least 50 full-time employees), 
besides the number of full-time employees, the employer must 
include the number of its full-time equivalent employees for a 
month, determined by dividing the aggregate number of hours of 
service of employees who are not full-time employees for the 
month by 120. In addition, in determining whether an employer 
is an applicable large employer, members of the same controlled 
group, group under common control, and affiliated service group 
are treated as a single employer.\7\ If the group is an 
applicable large employer under this test, each member of the 
group is an applicable large employer even if any member by 
itself would not be an applicable large employer.\8\
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    \6\Additional rules apply, for example, in the case of an employer 
that was not in existence for the entire preceding calendar year.
    \7\The rules for determining controlled group, group under common 
control, and affiliated service group under section 414(b), (c), (m) 
and (o) apply for this purpose.
    \8\In addition, in determining assessable payments (as discussed 
herein), only one 30-employee reduction in full-time employees applies 
to the group and is allocated among the members ratably based on the 
number of full-time employees employed by each member.
---------------------------------------------------------------------------

Assessable payments

    If an applicable large employer does not offer its full-
time employees and their dependents minimum essential coverage 
under an employer-sponsored plan and at least one full-time 
employee is so certified to the employer, the employer may be 
subject to an assessable payment of $2,000\9\ (divided by 12 
and applied on a monthly basis) multiplied by the number of its 
full-time employees minus 30, regardless of the number of full 
time employees so certified. For example, in 2016, Employer A 
fails to offer minimum essential coverage and has 100 full-time 
employees, 10 of whom receive premium assistance credits for 
the entire year. The employer's assessable payment is $2,000 
for each employee over the 30-employee threshold, for a total 
of $140,000 ($2,000 multiplied by 70, that is, 100-30).
---------------------------------------------------------------------------
    \9\For calendar years after 2014, the $2,000 dollar amount, and the 
$3,000 dollar amount referenced herein, are increased by the percentage 
(if any) by which the average per capita premium for health insurance 
coverage in the United States for the preceding calendar year (as 
estimated by the Secretary of Health and Human Services (``HHS'') no 
later than October 1 of the preceding calendar year) exceeds the 
average per capita premium for 2013 (as determined by the Secretary of 
HHS), rounded down to the next lowest multiple of $10.
---------------------------------------------------------------------------
    Generally an employee who is offered minimum essential 
coverage under an employer-sponsored plan is not eligible for a 
premium assistance credit or reduced cost-sharing unless the 
coverage is unaffordable or fails to provide minimum value.\10\ 
However, if an employer offers its full-time employees and 
their dependents minimum essential coverage under an employer 
sponsored plan and at least one full-time employee is certified 
as receiving a premium assistance credit or reduced cost-
sharing (because the coverage is unaffordable or fails to 
provide minimum value), the employer may be subject to an 
assessable payment of $3,000 (divided by 12 and applied on a 
monthly basis) multiplied by the number of such full-time 
employees. However, the assessable payment in this case is 
capped at the amount that would apply if the employer failed to 
offer its full-time employees and their dependents minimum 
essential coverage. For example, in 2016, Employer B offers 
minimum essential coverage and has 100 full-time employees, 20 
of whom receive premium assistance credits for the entire year. 
The employer's assessable payment before consideration of the 
cap is $3,000 for each full-time employee receiving a credit, 
for a total of $60,000. The cap on the assessable payment is 
the amount that would have applied if the employer failed to 
offer coverage, or $140,000 ($2,000 multiplied by 70, that is, 
100-30). In this example, the cap therefore does not affect the 
amount of the assessable payment, which remains at $60,000.
---------------------------------------------------------------------------
    \10\Under section 36B(c)(2)(C), coverage under an employer-
sponsored plan is unaffordable if the employee's share of the premium 
for self-only coverage exceeds 9.5 percent of household income, and the 
coverage fails to provide minimum value if the plan's share of total 
allowed cost of provided benefits is less than 60 percent of such 
costs.
---------------------------------------------------------------------------

Proposed and final regulations

    The IRS issued proposed regulations on the employer shared 
responsibility requirement on December 28, 2012.\11\ The 
preamble to the proposed regulations invited the public to 
provide comments on issues relating to the application of the 
employer shared responsibility requirement. As of February 4, 
2014--the date on which the Ways and Means Committee marked up 
and ordered reported H.R. 2575, as amended--final regulations 
had not yet been issued.
---------------------------------------------------------------------------
    \11\REG-138006-12, 78 Fed. Reg. 218, January 2, 2013. The IRS 
issued an advance notice of the proposed regulations on December 28, 
2012. As noted above, the IRS subsequently announced that no assessable 
payments will be assessed for 2014.
---------------------------------------------------------------------------
    As noted above, final regulations were issued on February 
10, 2014. The regulations define full-time employee (based on 
an average of at least 30 hours of service a week), full-time 
equivalent employee (based on 120 hours of service a month) and 
hours of service, as well as providing rules for determining an 
employer's full-time employees and full-time equivalent 
employees, effective for periods after December 31, 2014.\12\
---------------------------------------------------------------------------
    \12\Treas. Reg. secs. 54.4980H-1(a)(21), (a)(22) and (a)(24), 
54.4980H-2(c), and 54.4980H-3.
---------------------------------------------------------------------------

                           REASONS FOR CHANGE

    The Committee notes that for decades the standard work week 
in the United States has been 40 hours. The Committee believes 
that, by imposing a financial burden on employers with respect 
to employees who work less than the standard 40-hour work week, 
the Affordable Care Act creates incentives to reduce the paid 
hours of part-time employees or to dismiss these employees. 
Either outcome is detrimental to the employees and the economy. 
The Committee believes the appropriate measure of full-time 
employee status is the longstanding standard of 40 hours per 
week.

                        EXPLANATION OF PROVISION

    Under the provision, full-time employee means, with respect 
to any month, an employee who is employed on average at least 
40 hours of service per week (rather than 30 hours as under 
present law). In addition, the number of full-time equivalent 
employees for a month is determined by dividing the aggregate 
number of hours of service of employees who are not full-time 
employees for the month by 174 (rather than 120 as under 
present law).

                             EFFECTIVE DATE

    The provision is effective for months beginning after 
December 31, 2013.

                      III. VOTES OF THE COMMITTEE

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the vote of the Committee on Ways and Means in its 
consideration of H.R. 2575, the ``Save American Workers Act of 
2014.''
    The bill, H.R. 2575, was ordered favorably reported as 
amended by a roll call vote of 23 yeas to 14 nays (with a 
quorum being present). The vote was as follows:

----------------------------------------------------------------------------------------------------------------
         Representative             Yea       Nay     Present     Representative      Yea       Nay     Present
----------------------------------------------------------------------------------------------------------------
Mr. Camp.......................        X   ........  .........  Mr. Levin........  ........        X   .........
Mr. Johnson....................        X   ........  .........  Mr. Rangel.......  ........        X   .........
Mr. Brady......................        X   ........  .........  Mr. McDermott....  ........        X   .........
Mr. Ryan.......................        X   ........  .........  Mr. Lewis........  ........        X   .........
Mr. Nunes......................        X   ........  .........  Mr. Neal.........  ........        X   .........
Mr. Tiberi.....................        X   ........  .........  Mr. Becerra......  ........  ........  .........
Mr. Reichert...................        X   ........  .........  Mr. Doggett......  ........        X   .........
Mr. Boustany...................        X   ........  .........  Mr. Thompson.....  ........        X   .........
Mr. Roskam.....................        X   ........  .........  Mr. Larson.......  ........        X   .........
Mr. Gerlach....................        X   ........  .........  Mr. Blumenauer...  ........        X   .........
Mr. Price......................        X   ........  .........  Mr. Kind.........  ........        X   .........
Mr. Buchanan...................        X   ........  .........  Mr. Pascrell.....  ........        X   .........
Mr. Smith......................        X   ........  .........  Mr. Crowley......  ........        X   .........
Mr. Schock.....................        X   ........  .........  Ms. Schwartz.....  ........  ........  .........
Ms. Jenkins....................        X   ........  .........  Mr. Davis........  ........        X   .........
Mr. Paulsen....................        X   ........  .........  Ms. Sanchez......  ........        X   .........
Mr. Marchant...................        X
Mrs. Black.....................        X
Mr. Reed.......................        X
Mr. Young......................        X
Mr. Kelly......................        X
Mr. Griffin....................        X
Mr. Renacci....................        X
----------------------------------------------------------------------------------------------------------------

                     IV. BUDGET EFFECTS OF THE BILL

               A. Committee Estimate of Budgetary Effects

    In compliance with clause 3(d) of rule XIII of the Rules of 
the House of Representatives, the following statement is made 
concerning the effects on the budget of the bill, H.R. 2575, as 
reported.
    The bill, as reported, is estimated to have the following 
effects on Federal budget receipts for 2014-2024:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

B. Statement Regarding New Budget Authority and Tax Expenditures Budget 
                               Authority

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee states that the 
bill involves no new or increased budget authority. The 
Committee states further that the bill involves no new or 
increased tax expenditures.

      C. Cost Estimate Prepared by the Congressional Budget Office

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, requiring a cost estimate 
prepared by the CBO, the following statement by CBO is 
provided.

                                     U.S. Congress,
                               Congressional Budget Office,
                                 Washington, DC, February 25, 2014.
Hon. Dave Camp,
Chairman, Committee on Ways and Means,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2575, the Save 
American Workers Act of 2013.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contacts are Jean Hearne 
and Sarah Masi.
            Sincerely,
                                         Robert A. Sunshine
                              (For Douglas W. Elmendorf, Director).
    Enclosure.

H.R. 2575--Save American Workers Act of 2013

    Summary: 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.\1\ 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.
---------------------------------------------------------------------------
    \1\The Affordable Care Act comprises the Patient Protection and 
Affordable Care Act (Public Law 111-148), the health care provisions of 
the Health Care and Education Reconciliation Act of 2010 (P.L. 111-
152), and the effects of subsequent judicial decisions, statutory 
changes, and administrative actions.
---------------------------------------------------------------------------
    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 (UMRA).
    Estimated cost to the Federal Government: The estimated 
budgetary impact of H.R. 2575 is shown in the following table. 
The costs of this legislation fall within budget function 550 
(health).

------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      By fiscal year, in billions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2014       2015       2016       2017       2018       2019       2020       2021       2022       2023       2024    2014-2019  2014-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                   CHANGES IN DIRECT SPENDING

Exchange Subsidies:
    Estimated Budget Authority...................          0        0.1        0.8        1.4        1.7        1.7        1.9        2.2        2.3        2.3        2.3        5.8       16.8
    Estimated Outlays............................          0        0.1        0.8        1.4        1.7        1.7        1.9        2.2        2.3        2.3        2.3        5.8       16.8
Medicaid and CHIP:
    Estimated Budget Authority...................          0        0.2        0.4        0.7        0.5        0.5        0.6        0.6        0.6        0.7        0.7        2.4        5.5
    Estimated Outlays............................          0        0.2        0.4        0.7        0.5        0.5        0.6        0.6        0.6        0.7        0.7        2.4        5.5
Other:
    Estimated Budget Authority...................          0          *       -0.2       -0.2       -0.2       -0.1       -0.2       -0.2       -0.2       -0.1       -0.1       -0.8       -1.4
    Estimated Outlays............................          0          *       -0.2       -0.2       -0.2       -0.1       -0.2       -0.2       -0.2       -0.1       -0.1       -0.8       -1.4
Total Changes in Direct Spending:
    Estimated Budget Authority...................          0        0.3        1.1        1.8        2.1        2.1        2.3        2.7        2.8        2.9        2.9        7.4       20.9
    Estimated Outlays............................          0        0.3        1.1        1.8        2.1        2.1        2.3        2.7        2.8        2.9        2.9        7.4       20.9

                                                                                       CHANGES IN REVENUESEstimated Revenues:                                        0        0.2       -3.4       -4.3       -4.9       -5.7       -5.8       -6.0       -6.4       -7.9       -8.7      -18.0      -52.8
    On-Budget....................................          0        0.1       -4.2       -5.2       -5.8       -6.7       -7.1       -7.3       -7.8       -8.8       -9.3      -21.9      -62.1
    Off-Budgeta..................................          0        0.1        0.8        1.0        0.9        1.0        1.3        1.3        1.4        0.9        0.6        3.8        9.3                                                    NET INCREASE OR DECREASE (-) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUESChange in the Deficit............................          0          *        4.5        6.1        7.0        7.8        8.1        8.6        9.2       10.8       11.6       25.4       73.7
    On-Budget....................................          0        0.1        5.3        7.1        7.9        8.8        9.3        9.9       10.6       11.7       12.2       29.3       83.0
    Off-Budgeta..................................          0       -0.1       -0.8       -1.0       -0.9       -1.0       -1.3       -1.3       -1.4       -0.9       -0.6       -3.8      -9.3
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: Numbers may not sum to totals because of rounding.
        CHIP = Children's Health Insurance Program; * = savings or costs of less than $50 million.
a. All off-budget effects would come from changes in revenues. (The payroll taxes for Social Security are classified as ``off-budget.'')

    Basis of estimate: Under current law, beginning in 2015, 
certain large employers who do not offer health insurance 
coverage that meets the affordability and minimum-value 
standards defined in the ACA will have to pay a penalty to the 
federal government if they have full-time employees who receive 
a subsidy through a health insurance exchange.\2\ Employers 
with at least 50 full-time equivalent employees (FTEs) will be 
subject to that employer responsibility requirement. In 2015, 
however, those employers with at least 50 but less than 100 
FTEs will be exempt from the requirement if they certify that 
they did not make certain reductions to health insurance 
coverage or to the number of FTE employees.
---------------------------------------------------------------------------
    \2\Under the ACA, coverage is considered affordable if the employee 
would be required to pay no more than a specified share of his or her 
income (9.5 percent in 2014) for self-only coverage. In addition, the 
plan offered must pay at least 60 percent of the costs of covered 
benefits.
---------------------------------------------------------------------------
    For the purpose of determining which employers are subject 
to the penalty under the ACA, the number of FTEs for a given 
month is calculated by adding the number of full-time employees 
(defined as those who work at least 30 hours per week) to the 
number of hours of service for part-time employees in that 
month divided by 120. (That figure represents an average of 30 
hours a week for four weeks.)
    Penalties for affected employers will be a set dollar 
amount times a certain number of their full-time employees. The 
penalty will be calculated slightly differently depending on 
whether the employer does not offer health insurance at all or 
does not offer health insurance that meets the standards 
established by the ACA, as follows:
     If a large employer does not offer health 
insurance coverage to a certain minimum percentage of its full-
time employees, and if at least one of those full-time 
employees receives a subsidy through a health insurance 
exchange, the penalty will be based on the number of employees 
who work at least 30 hours per week, with some adjustments.\3\
---------------------------------------------------------------------------
    \3\In 2015, a large employer must offer health insurance coverage 
to at least 70 percent of its full-time employees. (That percentage 
requirement grows to 95 percent in 2016 and later years.) In general, 
the first 30 full-time employees will be excluded from the penalty 
calculation for failing to provide health insurance coverage to a 
certain percentage of full-time employees. However, in 2015, for 
employers with at least 100 FTEs, the first 80 full-time employees will 
be excluded from the penalty calculation.
---------------------------------------------------------------------------
     If a large employer offers health insurance 
coverage to at least the minimum percentage of full-time 
workers and one or more full-time workers receive a subsidy 
through a health insurance exchange, or if the coverage offered 
does not meet either the affordability or minimum-value 
standard defined in the ACA, the penalty will be based on the 
number of employees who work at least 30 hours per week that 
receive a subsidy through a health insurance exchange (up to a 
maximum).
    H.R. 2575 would make two changes to the calculation of FTEs 
for the purpose of determining which employers are subject to 
the employer responsibility requirement for a given month. 
First, the number of full-time employees would be defined as 
those who work at least 40 hours per week instead of those who 
work at least 30 hours per week. Second, that number would be 
added to the number of hours of service for part-time 
employees, defined as those working less than 40 hours per 
week, divided by 174 instead of 120. (That figure of 174 is 
roughly equal to 40 hours per week for 52 weeks, prorated to 
produce a monthly average.) For many employers, those changes 
to the FTE calculation would reduce the number of FTEs, thereby 
making fewer employers large enough to be subject to the 
employer responsibility requirement.
    In addition, H.R. 2575 would change the definition of full-
time employees for purposes of calculating the employer's 
penalty. Under current law, full-time employees for whom those 
penalties could potentially be assessed are defined as those 
who work at least 30 hours per week. Under H.R. 2575, penalties 
could be assessed only for those who work at least 40 hours per 
week.

Effects on employers' incentive to offer coverage

    The employer responsibility penalty under current law 
increases the cost of not offering employment-based coverage 
and thus increases the incentive for employers to offer 
employment-based coverage. In contrast, under H.R. 2575, some 
employers would no longer be subject to the employer 
responsibility requirement because of the change in the 
calculation of the number of FTEs. Other firms would still be 
subject to the employer responsibility requirement but would 
face lower penalty payments because fewer workers would be 
classified as full-time for purposes of the penalty 
calculation. As a result, CBO and JCT expect that more 
employers would choose to not offer coverage to their 
employees.
    Nevertheless, most of the affected employers would continue 
to offer coverage because most employers construct compensation 
packages to attract the best available workers at the lowest 
possible cost. That is, firms attempt to offer the mix of wages 
and nonwage benefits that will be most attractive to their 
current and potential employees while having the lowest cost. 
Most employers would continue to offer employment-based 
coverage to their employees under H.R. 2575 because their 
employees prefer such coverage over insurance policies offered 
through the individual market or exchanges.\4\
---------------------------------------------------------------------------
    \4\See Congressional Budget Office, CBO and JCT's Estimates of the 
Effects of the Affordable Care Act on the Number of People Obtaining 
Employment-Based Health Insurance (March 2012), http://www.cbo.gov/
publication/43082
---------------------------------------------------------------------------
    Under H.R. 2575, CBO and JCT expect that some employers 
would choose to reduce the number of employees who work 40 or 
more hours per week, in order to avoid or reduce the penalty. 
For example, without changing the total number of hours worked 
by its employees, an employer might reassign hours worked so 
that there are more employees just below the 40-hour threshold 
than there would otherwise be.
    Also, enacting H.R. 2575 would probably provide an 
incentive for some employers to redefine work hours so that 
more employees would be categorized as part-time. Some 
employers might seek to avoid or lower penalty payments by 
reducing the number of hours counted toward the full-time 
threshold without changing the actual number of hours worked or 
employees' wages. For example, an employer could discontinue 
counting lunch hours or breaks as work time. (The ability of 
employers to make such adjustments depends on labor-related 
state laws, as well as limitations under the Fair Labor 
Standards Act.)
    Because many more workers work 40 hours per week (or 
slightly more) than work 30 hours per week (or slightly more), 
the changes made by H.R. 2575 could affect many more workers 
than are affected under current law. CBO and JCT expect this 
effect to be limited, however, by employers' incentives to 
attract the best workforce for their firm in making decisions 
about hours, wages, and benefits. Even without any statutory 
requirements, employers whose current workforce comprises 
mostly 40-hour workers tend to offer health coverage at a 
greater rate than employers whose employees typically work 
between 30 and 35 hours per week. All told, CBO and JCT expect 
that a small percentage of employers would either reassign or 
reduce hours of employees who work 40 hours per week or 
slightly more.

Effects on insurance coverage

    Enacting H.R. 2575 would reduce the number of people 
enrolled in employment-based coverage and thus increase the 
number of people who would obtain health insurance from other 
sources or would be uninsured, CBO and JCT estimate.
    Specifically, if H.R. 2575 was enacted, CBO and JCT 
estimate that in most years between 2015 and 2024, insurance 
coverage would change in the following ways relative to CBO's 
current baseline projections:
     Roughly 1 million fewer people would enroll in 
employment-based coverage.
     Between 500,000 and 1 million more people would 
obtain coverage through an exchange, Medicaid, or CHIP.
     Fewer than one-half million additional people 
would be uninsured.

Effects on federal revenues and spending

    CBO and JCT estimate that H.R. 2575 would result in net 
budgetary costs to the federal government of $73.7 billion over 
the 2015-2024 period. (For purposes of this estimate, we assume 
that the bill will be enacted during 2014; we expect that there 
would be no effect on the budget during the remainder of fiscal 
year 2014 because the employer responsibility requirement will 
not take effect until 2015.) That projected increase in federal 
deficits consists of a $52.8 billion net reduction in revenues 
and a $20.9 billion net increase in direct spending over the 
10-year period. Of the net revenue decrease, an estimated $62.1 
billion would stem from a decrease in on-budget revenues, 
partially offset by an estimated $9.3 billion increase in off-
budget (Social Security) revenues.
    The reduction in revenues would result from smaller 
collections of penalty payments by employers. CBO and JCT 
estimate that those payments would be $63.4 billion lower over 
the next 10 years for two reasons, a reduction of more than 40 
percent: Fewer employers would be subject to the employer 
responsibility provision and thus would be exempt from paying 
penalties; and some employers that would be assessed penalties 
under the bill would make smaller penalty payments because 
fewer employees would be included in the calculation for those 
employers' penalty assessments.
    The reduction in revenues for penalty payments would be 
partially offset, CBO and JCT estimate, by a $12.4 billion 
increase in tax revenues over the 2015-2024 period because 
fewer people would be enrolled in employment-based coverage. 
That change would lead to a larger share of total compensation 
taking the form of taxable wages and salaries and a smaller 
share taking the form of non-taxable health benefits. (Other 
effects, including changes in the amount of exchange subsidies 
discussed below, would account for the remaining $1.8 billion 
net decrease in revenues.)
    CBO and JCT estimate that, over the 2015-2024 period, 
outlays would be higher (by $16.8 billion) and revenues would 
be lower (by $2.1 billion) under H.R. 2575 because more people 
would obtain premium and cost-sharing subsidies through 
insurance exchanges.\5\ That change would mostly reflect a 
movement away from employment-based insurance.
---------------------------------------------------------------------------
    \5\Subsidies for health insurance premiums are structured as 
refundable tax credits; the portions of such credits that exceed 
taxpayers' liabilities are classified as outlays, whereas the portions 
that reduce tax payments are reflected in the budget as reductions in 
revenues.
---------------------------------------------------------------------------
    In addition, CBO estimates that federal outlays for 
Medicaid and CHIP would be $5.5 billion higher over the 2015-
2024 period because more people would enroll in those programs. 
Most of that additional enrollment would be by people who would 
otherwise have employment-based insurance under current law. 
Other, smaller effects would reduce outlays by $1.4 billion 
over the 10-year period.
    Pay-As-You-Go considerations: The Statutory Pay-As-You-Go 
Act of 2010 establishes budget-reporting and enforcement 
procedures for legislation affecting direct spending or 
revenues. The net changes in outlays and revenues that are 
subject to those pay-as-you-go procedures are shown in the 
following table. Only on-budget changes to outlays or revenues 
are subject to pay-as-you-go procedures.

                              CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 2575, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON WAYS AND MEANS ON FEBRUARY 4, 2014
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                      By fiscal year, in millions of dollars--
                                                  ----------------------------------------------------------------------------------------------------------------------------------------------
                                                      2014       2015       2016       2017       2018       2019       2020       2021       2022       2023       2024    2014-2019  2014-2024
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      NET INCREASE OR DECREASE (-) IN THE ON-BUDGET DEFICITStatutory Pay-As-You-Go Impact...................          0        120      5,324      7,078      7,912      8,832      9,324      9,907     10,593     11,672     12,244     29,266     83,006
Memorandum:
    Changes in Outlays...........................          0        260      1,135      1,842      2,084      2,090      2,273      2,655      2,770      2,881      2,926      7,412     20,917
    Changes in Revenues..........................          0        141     -4,188     -5,236     -5,828     -6,742     -7,051     -7,253     -7,822     -8,791     -9,318    -21,854   -62,088
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Note: Numbers may not sum to totals because of rounding.

    Intergovernmental and private-sector impact: JCT has 
determined that H.R. 2575 contains no intergovernmental or 
private-sector mandates as defined by UMRA.
    Estimate prepared by: Sarah Masi, Jean Hearne, and staff of 
the Joint Committee on Taxation.
    Estimate approved by: Holly Harvey, Deputy Assistant 
Director for Budget Analysis.

                    D. Macroeconomic Impact Analysis

    In compliance with clause 3(h)(2) of rule XIII of the Rules 
of the House of Representatives, the following statement is 
made by the Joint Committee on Taxation with respect to the 
provisions of H.R. 2575: the effects of the bill on economic 
activity are so small as to be incalculable within the context 
of a model of the aggregate economy.
    Under present law, firms that employ more than 50 full-time 
equivalent employees are required either to provide qualifying 
affordable health coverage to their full-time employees or pay 
mandate penalties based on the number of full-time 
employees.\13\ The bill changes the calculation of ``full-time 
equivalent employee'' such that fewer firms cross this 
threshold to become subject to the requirement. It also changes 
the definition of ``full-time employee'' from an employee who 
works at least 30 hours per week to an employee who works at 
least 40 hours per week, thus reducing the number of employees 
to whom firms are required to provide health coverage. Both 
provisions of the bill, therefore, provide some firms relief 
from a specific form of employment cost required under present 
law.
---------------------------------------------------------------------------
    \13\As discussed elsewhere in this report, final regulations 
granted transition relief for firms employing between 50 and 100 
employees in 2015.
---------------------------------------------------------------------------
    Under present law and under the bill, the amount employers 
are willing to pay in employment costs for their employees is 
determined by the amount they expect employees to generate in 
additional output. Compensation costs include wages, benefits 
(including health coverage), and associated employment taxes 
(including any mandate penalty). If a change in tax policy 
changes the relative costs of these components of compensation, 
it is expected that their relative shares would be adjusted to 
minimize after-tax costs to employers while maximizing after-
tax compensation for employees. Thus, one behavioral response 
to the health coverage mandate is that employers may reduce 
cash wages or other benefits in order to hold their total 
compensation costs fixed. In this way, firms can avoid 
incurring increased costs of overall compensation. It is 
expected that the relaxation of the coverage mandate provided 
for in the bill will not affect overall employment costs for 
firms able to substitute between health benefits or the penalty 
and cash wages and other benefits. These types of adjustments 
are not expected to have an effect on overall economic growth, 
although they could have an effect on taxable income. The 
effects of these adjustments on taxable income are accounted 
for in the conventional revenue estimate.
    However, some employers may not be able to reduce cash 
wages and other benefits sufficiently to hold their employment 
costs fixed, either because their wage rates are at or near the 
minimum wage or because they are subject to some other 
institutional restrictions on adjusting wages and benefits, 
such as civil service requirements or collective bargaining 
contracts. And some employers may calculate that their 
employees would be better off with a small reduction in hours 
than with a reduction in other forms of compensation. For these 
employers, the employer mandate penalty under present law may 
result in increased costs, and provide some incentive for firms 
to adjust employment practices to avoid the requirements. It is 
expected that where possible, firms would reallocate hours 
worked among employees to minimize the number of employees 
deemed to be ``full-time.'' There have been many survey and 
anecdotal accounts of employers taking or planning to take such 
action under current law.\14\ These accounts do not provide 
enough information for us to be able to quantify the extent to 
which the reduction in hours per employee would result in an 
overall reduction in hours, or a reallocation of hours among 
employees.\15\ Because the health insurance requirements are 
unlikely to affect demand for the services of the employer, if 
the employer can minimize its exposure to the requirements 
without changing its scope of operations, it is expected to do 
so, by reallocating hours among employees. Such adjustments are 
not expected to have an effect on overall economic growth, 
although they would affect the allocation of disposable income 
among individual employees.
---------------------------------------------------------------------------
    \14\See, for example, John Tozzie, ``Franchise Industry: We're 
Already Cutting Hours Because of Obamacare,'' BloombergBusinessweek, 
November 13, 2013, http://www.businessweek.com/articles/2013-11-13/
franchise-industry-we-re-already-cutting-hours-because-of-obamacare; 
and testimonies of Lanhee J. Chen, Peter Anastos, Neil Trautwein, 
Thomas J. Snyder and Helen Levy at the Ways and Means Committee 
``Hearing on the Impact of the Employer Mandate's Definition of Full-
time Employee on Jobs and Opportunities,'' January 28, 2014.
    \15\It is too soon for statistically testable data on the response 
of employers to the employer mandate to be available. There has been 
some statistical analysis of responses to state and local employer 
health insurance mandates. Thomas C. Buchmeiller, John DiNardo, and 
Robert Valleta find no overall reduction in hours or wages over a 25-
year period in response to an employer health insurance mandate in 
Hawaii, but some trend toward substitution of part-time workers for 
full-time workers in ``The Effect of Employer Health Insurance Mandate 
on Health Insurance Coverage and the Demand for Labor in Hawaii,'' 
American Economic Journal: Economic Policy 3, 2011, pp. 25-51. Carrie 
H. Colla, William H. Dow, and Arindrajit Bue find no evidence of a 
change in employment or wages over a much shorter, 18 month time period 
in response to enactment of a health insurance mandate in San Francisco 
in ``The Labor Market Impact of Employer Health Benefit Mandates: 
Evidence from San Francisco's Health Care Security Ordinance,'' NBER 
Working Paper No. 17198, July, 2011.
---------------------------------------------------------------------------
    However, some employers may find that the adjustment costs 
associated with reallocating hours among employees sufficiently 
large that they prefer to reduce the total number of hours 
worked or reduce hiring to stay below the 50 full-time 
equivalent employee threshold. This could have an effect on 
overall economic activity, but it would be quite small relative 
to the overall size of the economy under present law, given the 
small number of employees working for employers subject to the 
mandate whose hours of work are near enough to the 30-hour 
threshold to make reducing hours worked to below 30 per person 
feasible.
    The change in the definition of full-time employee in the 
bill removes incentives for firms to reduce hours for workers 
below 30 hours per week. But it would increase the feasibility 
of reducing hours enough to avoid the mandate for employers 
whose employees typically work 40-hour weeks. Roughly five 
times as many workers work 40 hours per week as work 30 to 34 
hours per week; thus the incentive to re-allocate or reduce 
hours could potentially affect a larger share of the workforce 
under the bill than it does under present law.\16\ Offsetting 
this asymmetry, however, is the fact that a much larger share 
of those who work 40 hours than those who work 30 hours already 
have offers of qualifying employer coverage even without the 
employer mandate penalty, and thus their employment costs would 
not be affected by the bill.\17\
---------------------------------------------------------------------------
    \16\Bureau of Labor Statistics, ``Labor Statistics from the Current 
Population Survey,'' February 2013. Available at: http://www.bls.gov/
cps/cpsaat19.htmhttp://www.bls.gov/cps/cpsaat19.htm.
    \17\One study notes that almost 80 percent of those in firms of 100 
or more who work 37 hours or more per week are covered by employer 
insurance, while fewer than 50 percent of those who work between 30 and 
36 hours per week have employer insurance. See UC Berkeley Labor 
Center, ``Which Workers are Most at Risk of Reduced Work Hours under 
the Affordable Care Act,'' February 2013. Available at: http://
laborcenter.berkeley.edu/healthcare/reduced--work--hours13.pdf. 
According to an ADP study of large employers, 88 percent of firms offer 
health coverage to their full time workers, while only 15 percent of 
firms offer it to part-time workers. see: ADP Research Institute, 
``ADP's 2012 Study of Large Employer Health Benefits Benchmarks for 
Companies with 1,000+ Employees,'' pp.7-8. Available at: http://
www.adp.com//media/RI/whitepapers/NAS%20Health%20Benefits-
WhitePaper.ashx, at pp. 7-8.
---------------------------------------------------------------------------
    The bill would eliminate possible reductions in economic 
activity related to 30-hour workers under present law. However, 
it could provide an additional incentive for employers whose 
employees work 40 hours per week to rearrange or reduce their 
hours to fall under the threshold. It is anticipated that under 
the bill, employers with 40-hour workforces would use the same 
strategies described for the 30-hour employers to minimize 
their exposure to costs imposed by the mandate penalty. Most of 
these strategies would not affect overall economic activity, 
but it is possible that some of the workers who lose their 
health insurance under the bill would reduce their work hours 
in order to qualify for exchange subsidies, thus offsetting 
gains from restored labor for those who work close to 30 hours. 
In addition, under the bill there might be some employers of 
40-hour workers who would newly view compliance with the 
employer insurance requirements as a marginal decision, and for 
whom adjustment costs would be sufficient to cause an overall 
reduction in their hours worked and output thus also 
potentially offsetting gains in activity related to removing 
possible present-law incentives to reduce hours for 30-hour 
workers.
    While the bill is likely to change which employers 
reallocate or reduce hours worked for their employees, the net 
change in this practice relative to present law is expected to 
be quite small. The estimated tax savings for employers due to 
this bill, while important to individual employers, are quite 
small relative to overall employment costs in the economy. 
Thus, the effects of the bill on the economy are too small and 
uncertain to calculate within JCT macroeconomic models.

     V. OTHER MATTERS TO BE DISCUSSED UNDER THE RULES OF THE HOUSE

          A. Committee Oversight Findings and Recommendations

    With respect to clause 3(c)(1) of rule XIII of the Rules of 
the House of Representatives (relating to oversight findings), 
the Committee advises that it was as a result of the 
Committee's review of the provisions of H.R. 2575 that the 
Committee concluded that it is appropriate to report the bill, 
as amended, favorably to the House of Representatives with the 
recommendation that the bill do pass.

        B. Statement of General Performance Goals and Objectives

    With respect to clause 3(c)(4) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
bill contains no measure that authorizes funding, so no 
statement of general performance goals and objectives for which 
any measure authorizes funding is required.

              C. Information Relating to Unfunded Mandates

    This information is provided in accordance with section 423 
of the Unfunded Mandates Reform Act of 1995 (Pub. L. No. 104-
4).
    The Committee has determined that the bill does not contain 
Federal mandates on the private sector. The Committee has 
determined that the bill does not impose a Federal 
intergovernmental mandate on State, local, or tribal 
governments.

                D. Applicability of House Rule XXI 5(b)

    Rule XXI 5(b) of the Rules of the House of Representatives 
provides, in part, that ``A bill or joint resolution, 
amendment, or conference report carrying a Federal income tax 
rate increase may not be considered as passed or agreed to 
unless so determined by a vote of not less than three-fifths of 
the Members voting, a quorum being present.'' The Committee has 
carefully reviewed the bill, and states that the bill does not 
involve any Federal income tax rate increases within the 
meaning of the rule.

                       E. Tax Complexity Analysis

    Section 4022(b) of the Internal Revenue Service 
Restructuring and Reform Act of 1998 (the ``IRS Reform Act'') 
requires the staff of the Joint Committee on Taxation (in 
consultation with the Internal Revenue Service and the Treasury 
Department) to provide a tax complexity analysis. The 
complexity analysis is required for all legislation reported by 
the Senate Committee on Finance, the House Committee on Ways 
and Means, or any committee of conference if the legislation 
includes a provision that directly or indirectly amends the 
Internal Revenue Code and has widespread applicability to 
individuals or small businesses.
    Pursuant to clause 3(h)(1) of rule XIII of the Rules of the 
House of Representatives, the staff of the Joint Committee on 
Taxation has determined that a complexity analysis is not 
required under section 4022(b) of the IRS Reform Act because 
the bill contains no provisions that amend the Code and that 
have ``widespread applicability'' to individuals or small 
businesses, within the meaning of the rule.

  F. Congressional Earmarks, Limited Tax Benefits, and Limited Tariff 
                                Benefits

    With respect to clause 9 of rule XXI of the Rules of the 
House of Representatives, the Committee has carefully reviewed 
the provisions of the bill, and states that the provisions of 
the bill do not contain any congressional earmarks, limited tax 
benefits, or limited tariff benefits within the meaning of the 
rule.

                   G. Duplication of Federal Programs

    In compliance with Sec. 3(j)(2) of H. Res. 5 (113th 
Congress), the Committee states that no provision of the bill 
establishes or reauthorizes: (1) a program of the Federal 
Government known to be duplicative of another Federal program, 
(2) a program included in any report from the Government 
Accountability Office to Congress pursuant to section 21 of 
Public Law 111-139, or (3) a program related to a program 
identified in the most recent Catalog of Federal Domestic 
Assistance, published pursuant to the Federal Program 
Information Act (Public Law 95-220, as amended by Public Law 
98-169).

                 H. Disclosure of Directed Rule Makings

    In compliance with Sec. 3(k) of H. Res. 5 (113th Congress), 
the following statement is made concerning directed rule 
makings: The Committee estimates that the bill requires no 
directed rule makings within the meaning of such section.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

INTERNAL REVENUE CODE OF 1986

           *       *       *       *       *       *       *

Subtitle D--Miscellaneous Excise Taxes

           *       *       *       *       *       *       *

CHAPTER 43--QUALIFIED PENSION, ETC., PLANS

           *       *       *       *       *       *       *

SEC. 4980H. SHARED RESPONSIBILITY FOR EMPLOYERS REGARDING HEALTH 
                    COVERAGE.

  (a) * * *

           *       *       *       *       *       *       *

  (c) Definitions and Special Rules.--For purposes of this 
section--
          (1) * * *
          (2) Applicable large employer.--
                  (A) * * *

           *       *       *       *       *       *       *

                  [(E) Full-time equivalents treated as full-
                time employees.--Solely for purposes of 
                determining whether an employer is an 
                applicable large employer under this paragraph, 
                an employer shall, in addition to the number of 
                full-time employees for any month otherwise 
                determined, include for such month a number of 
                full-time employees determined by dividing the 
                aggregate number of hours of service of 
                employees who are not full-time employees for 
                the month by 120.]
                  (E) Full-time equivalents treated as full-
                time employees.-- Solely for purposes of 
                determining whether an employer is an 
                applicable large employer under this paragraph, 
                an employer shall, in addition to the number of 
                full-time employees for any month otherwise 
                determined, include for such month a number of 
                full-time employees determined by dividing the 
                aggregate number of hours of service of 
                employees who are not full-time employees for 
                the month by 174.

           *       *       *       *       *       *       *

          (4) Full-time employee.--
                  [(A) In general.--The term ``full-time 
                employee'' means, with respect to any month, an 
                employee who is employed on average at least 30 
                hours of service per week.]
                  (A) In general.--The term ``full-time 
                employee'' means, with respect to any month, an 
                employee who is employed on average at least 40 
                hours of service per week.

           *       *       *       *       *       *       *

                            DISSENTING VIEWS

    Because of the short notice, the Joint Committee on 
Taxation (JCT) and the Congressional Budget Office (CBO) were 
unable to provide the Committee with estimates on both cost and 
insurance coverage changes as a result of the bill. In fact, 
one reason the analysis is unavailable is because the effects 
of the legislation are so complicated. Given that this 
legislation could result in substantial compensation and 
coverage shifts for anyone who works between 30 and 40 hours a 
week, it will have significant budgetary effects, including 
both a loss of revenues and increased federal spending. Under 
the legislation, many employers would no longer be required to 
offer affordable coverage or pay a ``free rider'' penalty to 
help offset their employees' health coverage in the Exchanges 
or Medicaid.
    No member should be asked to vote blindly on legislation 
with such potentially far-reaching implications. To that end, 
numerous important questions went unanswered during the 
Committee's markup, and still remain unanswered, including, but 
not limited to, the following:
    1. How much will this bill cost taxpayers?
    2. How much will this bill increase federal spending?
    3. What is the estimate of lost revenue resulting from 
fewer employers being subject to employer responsibility 
penalties?
    4. How many Americans (workers and dependents) will lose 
their job-based health insurance coverage as a result of this 
bill?
    5. How many Americans will be forced to shift from employer 
coverage to Medicaid and the Exchanges as a result of this 
bill?
    6. How many Americans will remain or become uninsured as a 
result of this bill?
    7. How many Americans will have their hours cut or 
otherwise lose wages as a result of this bill?
    8. Which income groups are most affected by these changes?
    All of these questions are important to understand the cost 
and health insurance coverage effects of this legislation. The 
upshot is that it may well increase the federal deficit while 
simultaneously decreasing employer-sponsored insurance 
coverage. If that is so, it is two steps in the wrong 
direction.
    While JCT and CBO have been unable to offer estimates at 
this time, several non-partisan researchers have found that 
raising the threshold of full-time from 30 hours to 40 hours 
would place two to five times as many workers at risk of having 
their hours just slightly reduced in order to avoid employer 
responsibility requirements. The 30-hour threshold was designed 
to minimize gaming, since the overwhelming majority of 
businesses currently use a threshold higher than 30 hours and 
would have to substantially reduce hours to avoid their 
responsibility. The fact of the matter is that a business 
generally operates with either a part-time or full-time work 
force. There aren't many employers who will re-tool their 
entire business practice and staffing model to avoid the 30-
hour requirement, but there are those who already operate in a 
part-time workforce or are planning to do so for other reasons. 
The simple fact is that some employers want the law changes 
because it is difficult to avoid their responsibility under a 
30-hour standard. This is not about protecting employee 
benefits, it is about protecting businesses. That's why the 
legislation is opposed by Consumers Union, AFL-CIO, AFSCME, and 
the National Education Association.
    In fact, recent studies provide little evidence that the 
Affordable Care Act (ACA) has created an incentive to 
significantly shift toward part-time work. We fear moving to 
40-hours would affect many more workers and invite serious 
gamesmanship as employers tweak work schedules to reduce hours 
and avoid their responsibility to offer coverage or contribute 
to the public cost of coverage for their workers.
    The bill is the latest in a continued series of attacks by 
the Majority on the ACA. Republicans continue to blame the ACA 
for business decisions that would occur even without reform. It 
is disingenuous for ACA opponents to claim workforce changes 
years in advance of the ACA employer responsibility provisions 
taking effect. Since 2010, we have heard claims of job loss, 
benefit cuts and other draconian steps to avoid taking 
responsibility for supporting or helping to fund employee 
health benefits. However, just this morning, the CBO reported 
that there is ``no compelling evidence that part-time 
employment has increased as a result of the ACA.'' The report 
also indicated that labor force changes predicted under the ACA 
are ``almost entirely because workers will choose'' to leave 
jobs they no longer want or need, now that they can obtain 
health benefits elsewhere. This frees up those who want to stay 
home to raise children, need to care for an ailing relative, or 
want to start a new business. As further proof that the ACA is 
not the ``job killer'' claimed by the Republican, the private 
sector has added 8.1 million jobs since the ACA was enacted in 
March, 2010.
    This bill reiterates the misplaced priorities of the 
Committee's majority. This bill was brought before the 
Committee on Ways and Means despite the many pressing issues 
over which we have exclusive jurisdiction. Among other items, 
we are in imminent need of legislation to raise the debt 
ceiling. We have not considered legislation to help more than 
1.6 million long-term uninsured Americans hurt by the 
expiration of emergency unemployment insurance. Instead of 
considering these key measures, H.R. 2575 has been rushed 
before the Committee without any firm information on its cost 
and coverage effects. Under this legislation, millions of 
Americans are at risk of losing their job-based health benefits 
or having their hours cut or both. It should be no surprise 
that the Democratic Members of the Committee on Ways and Means 
voted against H.R. 2575.
    In sum, while we stand ready to work across the aisle to 
perfect health reform and pursue technical corrections, we 
oppose efforts that would undermine its core tenets and lead to 
a loss in job-based benefits or wages for American workers and 
their families.
            Sincerely,
                                   Sander Levin.
                                   Charles B. Rangel.
                                   Jim McDermott.
                                   John Lewis.
                                   Richard E. Neal.
                                   Xavier Becerra.
                                   Lloyd Doggett.
                                   Mike Thompson.
                                   John B. Larson.
                                   Earl Blumenauer.
                                   Ron Kind.
                                   Bill Pascrell, Jr.
                                   Joseph Crowley.
                                   Allyson Y. Schwartz.
                                   Danny K. Davis.
                                   Linda T. Sanchez.

                                  
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