Obamacare Employer Mandate Delayed Again
Last July, just before the Independence Day holiday, the White House quietly announced that it was delaying Obamacare’s employer mandate—the law’s requirement that medium and large businesses sponsor health insurance for every worker—until 2015. It turned out to be the first of dozens of unilateral decisions by the Obama administration to ignore the law that Congress passed in 2010. But the story doesn’t end there. Yesterday, the Treasury Department announced that it would be further delaying the employer mandate. At this point, it’s worth wondering if the employer mandate will ever take effect, and what this will mean for other key portions of the law.
White House makes a hash of the employer mandate…
As a reminder, Section 1513 of the Affordable Care Act—which adds Section 4980H to the Internal Revenue Code—requires that all “large employers” offer coverage to all of their full-time employees, or face steep fines. “Large employers” are defined as those with 50 or more full-time-equivalent employees. (For a detailed explanation of the employer mandate, and how it incentivizes businesses to offer “unaffordable” coverage to their workers, read this article from last May.)
The statutory text of the ACA is quite clear as to the effective date of the employer mandate. “The amendments made by this section shall apply to months beginning after December 31, 2013,” concludes Section 1513.
So much for that. Last July, the administration delayed the mandate by another year. Yesterday they delayed it for another twelve months—until the beginning of 2016—for businesses with between 50 and 100 workers. The delay is meant to “ease the transition to a 30-hour [work] week,” according to a senior Treasury official, given that the employer mandate counts as “full-time” anyone working 30 hours or more per week.
For businesses with more than 100 workers, the mandate will go into effect in 2015, but businesses will only “need to offer coverage to 70 percent of their full-time employees in 2015 and 95 percent in 2016 and beyond.”
The final regulations are here. “Questions and answers” on the administration’s actions are here. A “fact sheet” from the Treasury Department is here. It’s far from clear how the administration legally justifies its blatant disregard for the law as written, but they came up with something last time, and will likely do so again.
…Which also makes a hash of exchange subsidies, individual mandate
When the administration delayed the employer mandate the first time around, I wrote that it would have “far-reaching implications for the private insurance market.” I noted that “more people will want to enroll in Obamacare’s subsidized insurance exchanges” as a result of the delay, accelerating the unwinding of the employer-sponsored insurance system. Businesses will smell blood in the water, and push for an indefinite delay of the mandate. After all, the 2016 election will be just around the corner.
That’s generally a good policy outcome. More people should purchase insurance on their own, instead of being dependent upon their employer for coverage. Indeed, I’m with Ezra Klein, who tweeted last July that “the employer mandate is bad policy and should be eliminated. But the unilateral way the [White House] is doing it isn’t good.”
But here’s the thing. You’re only eligible for subsidized coverage on the Obamacare exchanges if your employer hasn’t offered you “affordable” coverage. But what happens if your employer doesn’t have to report whether it has offered you coverage? Then the administration has to rely on the “honor system” to determine whether or not you’re eligible for subsidies.
My colleague Robert Book has noted that delaying the employer mandate also messes up the individual mandate, because you can only enforce the individual mandate if employers report whether or not you’ve accepted their offer of health coverage.
End the charade and repeal the employer mandate
We should simply repeal the employer mandate. It’s a huge drag on hiring, because the mandate increases the cost of hiring someone (because on top of wages, you now have to pay for his costly, government-approved insurance plan). The House of Representatives has already proposed a bill to repeal the provision, and it would be quite easy for the Senate to do so as well.
But the Obama administration doesn’t want to do things the old-fashioned way, by actually passing a law through Congress. By making changes through administrative fiat, Obama has given his Republican successor—should he ever have one—a playbook for undermining the architecture of Obamacare.
The President fears that by opening the Affordable Care Act to legislative changes, many more aspects of the law could get repealed or changed by Congress. But he has to do something, because his Democratic colleagues fear that they will lose control of the Senate in November, if Obamacare is implemented according to the way it was designed.
So, instead the President simply chooses to ignore the law. It’s up to the public to hold him accountable.
This piece originally appeared in Forbes
This piece originally appeared in Forbes