Obamacare will force higher education reform. Will adjuncts benefit?

The U.S. Supreme Court upheld healthcare reform today, and the decision promises to change the landscape of the healthcare industry in America.  While much of the focus of the debate has been on the individual mandate, the employer mandate may have some surprising (and potentially positive) implications for the nation’s nearly 1 million adjunct faculty who often teach for poverty wages and are frequently denied access to employer sponsored health insurance.

The controversial health care law includes an employer mandate that requires large employers (i.e., those with more than 50 full-time employees or full-time equivalents) to provide health insurance to its employees or pay a penalty.  Virtually every college and university in the country would qualify as a large employer under the law, though I have been unable to ascertain whether there exist any exemptions to the applicability of certain provisions of the law to organs of state and local governments (e.g., state supported universities and local community colleges).  Having uncovered no such exclusions, I presume that the law applies equally to colleges and universities with the possible exception of certain religious schools.

In an effort to curtail an anticipated free-rider effect, a so-called free-rider penalty will be levied upon organizations that qualify as large businesses under the act and where at least one employee of the organization receives the government subsidy (premium credits) provided for under the law.  To qualify for this subsidy the employee must meet two conditions.  First, their household income must be less than 400% of the Federal Poverty Level (amount varies with family size).  Secondly, the employee’s portion of the insurance premium on the employer’s plan must exceed 9.5% of the employee’s household income.

So let’s examine a real world scenario based upon the employment conditions at The University of Akron, a state university located in Akron, Ohio.  Again, I will reiterate that I believe that the law applies equally to private and public sector organizations, though the states attorneys general who fought the law will likely continue to fight to curtail its application now that it has been upheld as constitutional.

There are roughly 1,000 part-time faculty teaching at The University of Akron.  They earn on average about $800 per credit hour, and they are limited by university rules to teaching a maximum of 21 credit hours per academic year.  This yields an annual salary of $16,800 per year for working 7/8 of a full-time equivalent load.  This is $6,250 below the 2012 federal poverty level for a family of four.  It is $75,400 below the 4 times the federal poverty level required for eligibility for the subsidy under the healthcare law.  It would appear that the vast majority of part-time faculty members at The University of Akron meet this first income requirement.  Let’s call it 70% for the sake of illustration (we’ll use this percentage in a calculation later).

As to the second condition requiring that the employee’s portion of the insurance premium, the low wages paid to part-time faculty at The University of Akron drive this calculation.  And it doesn’t work in the university’s favor.  9.5% of an annual $16,800 wage equals $1,596 per year.  The annual employee contribution for the university’s PPO plan is $2,193 for an employee earning $28,000 per year or less.  Only one employee of the university need qualify under this provision for the institution to be subject to the rule.

The free-rider penalty can be substantial.  If the organization otherwise provides health insurance to employees, its annual penalties will be equal to the lesser of the number of subsidized employees (i.e., those receiving premium credits) x $3,000 OR the number of all employees in the organization minus 30 x $2,000.

It is reprehensible that adjunct/contingent faculty are paid such low wages and denied access to such basic benefits as health insurance.  The law that was affirmed today by the U.S. Supreme Court may have a pronounced impact on the business model to which higher education has become addicted.  Here’s why…

The penalties that will accrue to organizations that fail to meet the employer mandate are substantial.  If 700 of UA’s 1,000 part-time faculty are eligible for the subsidy, this would yield a total cost to the university of $2.1 million.  Of course, those are small potatoes when compared to the aggregate compensation of the university’s president and 36 or so vice presidents (in excess of $5 million per year in cash compensation alone, which is more than 50% of what UA’s 1,000 part-time faculty earn as a group)…to say nothing of its athletics program or the proposed $400 million physical expansion that comes on the recently completed half a billion dollars in physical campus improvements.

So perhaps schools like The University of Akron will decide that paying the subsidy is the price that they must pay in order to continue abusing adjuncts.  After all, $2.1 million absorbed by 30,000 or so students is only about $70 per student.  I can imagine the forthcoming student fee appearing as a line item on the tuition bill.  It will read something like Administrative Health and Wellness Regulatory Recovery Fee.

Ever the optimist, I cannot help but hope that the levying of such penalties–or the mere threat of the same–will serve to focus attention on the fact that our colleges and universities are riding free on the backs of hardworking, highly educated teachers who earn, at least at my former institution, less than manual laborers who tend to the grounds of an ever-expanding campus.  All the while these adjuncts are being denied the opportunity for a better life that is depicted in glossy viewbooks.  The groundskeeper toils away with the hope that his child may obtain the college education that he was not afforded.  For his sake and the sake of his child, he should hope that they don’t become an adjunct, lest they exchange sweat and gloves for the ball and chain of perpetual poverty and debt.

4 comments

  1. I like this. It seems quite strong, and it’s good news, I think, for the adjunct cause. It wasn’t something I noticed right off, and it’s wonderful to read something so soon that connects two hugely important problems.

  2. Slapping myself for missing this ~ even though listening to coverage while posting about adjunct issues, but do have a question.

    Would part time status of many adjuncts make a difference? Will the mandate include them as employees to be covered?

    Or is this a potential gray area to be argued over, for, against?

    • Matt Williams says:

      That’s a great question, Vanessa. The answer is yes. The hours worked by part-time workers are aggregated for the purpose of calculating the free rider penalty. Each 120 hours per month of part-time labor equals one FTE for the purpose of this calculation.

      Adjuncts need to lobby to make sure that this calculation is performed equitably.

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