Obamacare Offers Firms $3,000 Incentive to Hire Illegals over Native-born Workers

11/27/2014

President Obama tries to quiet one of three hecklers as he addresses the crowd after meeting with community leaders about the executive actions he is taking to fix the immigration system Tuesday, Nov. 25, in Chicago. (Associated Press) more >

Under the president’s new amnesty, businesses will have a $3,000-per-employee incentive to hire illegal immigrants over native-born workers because of a quirk of Obamacare.

President Obama’s temporary amnesty, which lasts three years, declares up to 5 million illegal immigrants to be lawfully in the country and eligible for work permits, but it still deems them ineligible for public benefits such as buying insurance on Obamacare’s health exchanges.

Under the Affordable Care Act, that means businesses who hire them won’t have to pay a penalty for not providing them health coverage — making them $3,000 more attractive than a similar native-born worker, whom the business by law would have to cover.

The loophole was confirmed by congressional aides and drew condemnation from those who said it put illegal immigrants ahead of Americans in the job market.

“If it is true that the president’s actions give employers a $3,000 incentive to hire those who came here illegally, he has added insult to injury,” said Rep. Lamar Smith, Texas Republican. “The president’s actions would have just moved those who came here illegally to the front of the line, ahead of unemployed and underemployed Americans.”

A Department of Homeland Security official confirmed that the newly legalized immigrants won’t have access to Obamacare, which opens up the loophole for employers looking to avoid the penalty.

The Health and Human Services Department, which oversees Obamacare, referred questions to the White House, which didn’t reply to a request for comment.

But Mr. Obama, traveling in Chicago Tuesday to defend his immigration plans, said his moves would boost the economy and vowed they wouldn’t hurt American workers’ wages.

“Immigrants are good for the economy. We keep on hearing that they’re bad, but a report by my Council of Economic Advisers put out last week shows how the actions we’re taking will grow our economy for everybody,” he said.

This isn’t the first time the Obamacare loophole has popped up on immigration. The overhaul bill that passed the Senate on a bipartisan vote last year created the same situation, granting illegal immigrants a long probationary period where they could legally work but weren’t eligible for public benefits such as Obamacare.

At the time, Arizona Sen. John McCain, one of the bill’s GOP authors, acknowledged the problem and vowed to change it before it became law. Despite passing the Senate, the bill has stalled, with Democratic leaders refusing to send it to the House for further action.

Brian Rogers, a spokesman for Mr. McCain, said Tuesday the solution to the loophole is to get rid of Obamacare’s employer mandate, “which would eliminate the incentive to hire people who are ineligible for Obamacare subsidies.” Mr. Rogers said the Republican majority that takes control of Congress next year should vote on that proposal.

Under Obamacare, businesses with 50 or more employees are supposed to provide insurance coverage to their full-time workers. If they refuse, they are assessed a penalty for every employee who receives subsidies to sign up for coverage on the health exchanges. But because the newly legalized illegal immigrants covered by Mr. Obama’s order can’t sign up for the exchanges or receive subsidies, employers aren’t penalized for hiring them.

Employers take notice

Some employers have already taken notice, and Dennis Michael Lynch, a documentary filmmaker, raised the issue on political strategist Dick Morris’s radio show in Philadelphia over the weekend.

“The dimensions of this problem are enormous. One wonders if any of Obama’s crew spotted it during the run-up to his executive order. It is hard to imagine former President Clinton failing to notice such a conflict between his two major programs,” Mr. Morris said in an op-ed Tuesday in The Hill, a Capitol Hill newspaper.

The Obama administration has delayed the employer mandate penalty for some businesses, but it is slated to take full effect in a year.

The public is split on Mr. Obama’s latest immigration move. A new Quinnipiac University Poll released Tuesday showed slightly more people opposed the president taking unilateral action than supported him.

Just as striking, however, is that overall support for illegal immigrants in America is at an all-time low in the Quinnipiac survey, with 35 percent now saying they should all be pushed out of the country — up from 26 percent just a year ago.
Mr. Obama created the Obamacare loophole incentive in a 2012 Homeland Security decision.

Until August of that year, those granted “deferred action” — the power Mr. Obama also used in his new temporary amnesty — were eligible for public benefits, including Obamacare. But just two months earlier, Mr. Obama had announced a massive expansion of deferred action for hundreds of thousands of “dreamers,” or young illegal immigrants brought to the U.S. as children, and in order to prevent them from getting public benefits, Homeland Security officials issued a new policy giving the dreamers a new category of legal status that left them outside of Obamacare.

Immigrant rights groups protested the move at the time, arguing it left the newly legal dreamers without coverage. The National Immigration Law Center said excluding dreamers from Obamacare amounted to discrimination against tax-paying immigrants who are following the rules, and set up a new second-class status for some immigrants.

The NILC didn’t respond to a request for comment on Mr. Obama’s latest move.

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