Obamacare

Will Obamacare's Employer Mandate Ever Be Implemented?

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Whitehouse.gov

Several days ago, a trio of researchers at the Urban Institute released a paper titled "Why Not Just Eliminate the Employer Mandate?" The paper argues that the provision in Obamacare requiring employers with 50 or more workers to provide health coverage or pay a penalty could be ditched without significant effect on insurance coverage.

The paper's particulars are probably less relevant than its overall argument: It's the latest in a series of motions designed to test the waters for the elimination of the requirement. Movement began last summer, when, over a long holiday weekend, the administration called for a one-year delay of the employer mandate and reporting requirements. It continued this year when an additional year's delay for smaller businesses, as well as a reduction in the requirement for larger employers, was tacked on.

At this point, it's widely expected that the provision will remain in limbo permanently. Former White House Press Secretary predicted last month that the provision would never go into effect; the Urban paper will give the administration ammunition to defend the move on policy grounds if and when another delay or permanent postponement is announced.

The policy rationale for ending the employer mandate is clear enough: Because it requires employers to provide coverage for full-time workers once the 50-employee threshold is reached, it creates incentives for firms to avoid hiring, or to cap employee hours so that they do not qualify as full time. End the mandate, and those incentives disappear.

But the employer mandate wasn't included in the law for no reason. It's meant to prevent employers from simply dropping coverage and sending full-time workers to get insurance through the exchanges. In an initial draft of the law that lacked a mandate, the Congressional Budget Office (CBO) estimated that about 15 million employees would lose their workplace coverage and be sent to the exchanges instead—increasing the law's disruption of current coverage arrangements and the cost of subsidies for exchange-based insurance. The inclusion of an employer mandate significantly mitigated the CBO's estimate of these effects.

This is an old concern. If a health law creates a venue for subsidized coverage outside the workplace, won't employers drop coverage and shift workers to new insurance? When Hillary Clinton worked on a health policy reform plan in the 1990s, she remarked in congressional testimony that "we worry that the numbers of people who currently are insured through their employment will decrease because there will no longer be any reason for many employers" to offer coverage to workers.

The more important concern, however, is not the transition away from employer-sponsored coverage, which is a necessary and desirable component of most productive health reform proposals (although Obamacare's mechanism is probably not ideal). Instead, the question is whether the Obama administration would have the legal authority to abandon the employer mandate, should it choose to do so. The initial delay, announced last summer, was, generously, a legal stretch. The second delay, announced in February, was almost certainly an illegal maneuver, as even some supporters of the law have conceded. Further postponements would presumably also be illegal. If the administration is to proceed as Gibbs has suggested, then it will need more than a policy rationale. It will need a basis for its legal authority as well. 

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  1. Laws are for little people.

    1. There are two types of people. Those who write the laws, and those who are compelled to obey them.

  2. “The initial delay, announced last summer, was, generously, a legal stretch. The second delay, announced in February, was almost certainly an illegal maneuver, as even some supporters of the law have conceded. Further postponements would presumably also be illegal.”

    What difference, at this point, does it make?

  3. …”Further postponements would presumably also be illegal.”…

    But he MEANS well! He helps the wimenz and minorities!

    1. Oh, and free shit!

  4. They want to delay it until the GOP takes office, so their opponents can be blamed for the damage they caused, so the damage they caused last time they had power will win them more power.

    1. And it will work, because the GOP President and congress will have driven healthcare onto a ditch, and only the Democrats can fix it.

    2. If the GOP takes office they can delay it some more. Or just eliminate it.

  5. So, the President is slowly repealing Obamacare, one tiny bit at a time?

    1. selective enforcement isn’t the same as repeal.

      -jcr

      1. Fair point. At some point they are going to start granting exemptions only to certain favored businesses.

        We should be pushing to fully repeal the employer mandate.

  6. If the administration is to proceed … It will need a basis for its legal authority as well.

    Oooh… Ooooh… I know this one!

    FTW

    er, no that’s not right.

    WTF

    no, no, that’s not it either.

    1. FYTW.

  7. Optional laws for an optional presidency. It’s like the nation elected “none of the above” and this guy showed up.

    The employer mandate is law. It should be enforced by the administration on the people, good and hard. Let them own the biatch.

  8. but always remember: Obamacare is a success!

  9. I find it incomprehensible that proponents of the law would be willing to leave so many millions of people suffering from sub-standard insurance

    Anything failing to meet Obamacare requirements is by definition ‘substandard’

    Why would Obama allow employers to skate while forcing individuals to cough up full price to pay for the joys of Comprehensive Obama-Loving Coverage that doesn’t have those nasty ‘gaps’ that send people to the poorhouse?

    Also, without forcing the vast majority to comply with O-Care, how will this policy ever get to the goal of Single-Payer which we all know is like totally superior anyway?… just look at the VA.

    If they now claim that employer coverage is ‘good enough’ as it is, it does raise the question why such all-encompassing and structurally-weakening legislation was necessary simply to provide an ‘option’? (no, wrong word = since the ACA killed off all the other options…) for the ‘uninsured’ (no, wrong word- since most sign-ups now are people who lost their ‘cheaper’ insurance)

    If this is where they stop, then the whole point of the ACA was… what? = to raise prices and lower quality for *most* of the ~15 million in the private insurance market?

    1. Anything failing to meet Obamacare requirements is by definition ‘substandard’

      Anything failing to meet Obama care requirements is by definition ‘substandard’

      FTFY!

  10. the question is whether the Obama administration would have the legal authority to abandon the employer mandate

    Oh, it’s probably buried *somewhere* in that 2400-page-and-counting monstrosity.

  11. “Because it requires employers to provide coverage for full-time workers once the 50-employee threshold is reached, it creates incentives for firms to avoid hiring, or to cap employee hours so that they do not qualify as full time.”

    Which is it?:

    a) Are they so stupid that they did not foresee this?
    b) Did they foresee this but not care, figuring they could just blame the businesses?
    c) Did they foresee this, but as a feature, not a bug?

    1. It is number one. I know everyone likes to attribute a vast evil conspiracy to these people. I don’t believe that. Old Marxists engaged in vast conspiracy. These people are not Marxist. They are too stupid for that. They have long since renounced the concepts of objective reality, truth and logic. They think the world is whatever they fantasize it to be. They think that is they mandate businesses to do this or that, businesses will magically do it, incentives be damned. Actually, it is probably worse than that. I don’t think they care what businesses do in reality or what kind of real world effects this has. They are too far gone even for that. All that matters is that they did something and that something was in their view “the right thing to do”. They live in a complete irrational fantasy world.

      1. a vast evil conspiracy.

        Obama is a master of not solving problems in order to retain the constituency that would be helped by solving the problem.

        Examples:

        -Benghazi
        -Drug war
        -Gay marriage (Biden actually forced his hand on this. Obama had no intention of supporting gay marriage. If gay marriage was legal gays no longer would have a reason to vote for him)
        -Immigration
        -5 years in Iraq
        -Gitmo
        – Net Neutrality

        There are plenty more.

        Clinton and Carter and Democrats of the past (excluding FDR) actually did try to fix shit. Obama is something new..or if you look at FDR he is something old.

        And the whole democratic party has followed him.

        I remember reading before Obama was elected that he governs in a way that he listens to everyone and votes left. That has turned out wrong in more then the obvious way. He does not listen sure. But he also does not always “vote left”. Examples include gay marriage and Gitmo and Iraq and war on drugs. How he does consistently vote though is he votes for what ever makes the problem persist.

    2. We probably need to ask RC Dean and his Iron Laws…

      Something about Foreseen consequences are not unintended.

      No idea if i am saying that right.

      1. RC’s laws only work if you assume a rational actor. The people who wrote this law are not rational actors.

    3. They believe that every business is literally swimming in profit, which is kept as swimming pools full of gold coins for the nephews to play in when they visit. Forcing them to pay more, via raising the minimum wage or requiring specific benefits be paid, just means fewer gold coins in the pool. And since those gold coins are being returned to “the economy” rather than being hoarded, it means everyone will be better off.

  12. we worry that the numbers of people who currently are insured through their employment will decrease

    Why? Employer payed insurance is horrible and only hides the costs of health care from the individual consumer. The consumer bothered by actually paying for what she consumes will simply consume more and more health care driving up demand which in turn drives up health care costs.

    I predict within 1 year Shrike will claim Obama intended to eliminate employer provided health care. Cuz “Obama is a free market genius” or something.

    1. Employer payed insurance is horrible and only hides the costs of health care from the individual consumer. The consumer bothered by actually paying for what she consumes will simply consume more and more health care driving up demand which in turn drives up health care costs.

      It is also the one thing that, by forcing people into small risk pools, ensures that health insurance doesn’t work like life insurance and is affordable just as long as you are unlikely to need it.

      If we ever get to a true individual market for health insurance, we will have single payer in very quick order. With employer provided health insurance people don’t worry about losing their health insurance when they get old or sick. With individual insurance they rightfully will. And they won’t tolerate such a risk and demand single payer.

      Indeed, medicare is really just a form of single payer for old people. Why did people demand that? Because it is hard for retired people to buy health insurance since they no longer work and get it from their employer. Get rid of employer based health insurance and everyone in the country will be one serious illness, or crossing some predefined age threshold of no longer being able to afford health insurance. That is how it works in life insurance. You an afford it provided you are not old and you are healthy.

      1. With employer provided health insurance people don’t worry about losing their health insurance when they get old or sick.

        Are you freaking kidding?
        Get too sick to work, or retire early, and you lose your insurance.

        OF COURSE people worry about losing their employer-based insurance. That’s the number one problem people have with it. Their healthcare is totally dependent on them keeping the same job.

        1. Are you freaking kidding?
          Get too sick to work, or retire early, and you lose your insurance.

          Yes and we have medicare and medicaide as a result of that. Get rid of employee based health insurance and you will get medicaide for all as people demand the ability to buy insurance if they become a bad risk.

          OF COURSE people worry about losing their employer-based insurance. That’s the number one problem people have with it. Their healthcare is totally dependent on them keeping the same job.

          Yes. Got to a true individual market and it will depend on them not needing it.

          1. You seem to be fixated on this idea that the individual market is somehow incapable of providing an insurance product that doesn’t become more expensive as your risk goes up. I think that’s just wrong.

            There are all sorts of mechanisms for markets to provide insurance products where you are guaranteed a certain rate – by charging people more when they are low risks. You pay more when you are a low risk, and in exchange, you get a lower rate when you are a high risk. Why is this an impossible concept for you to understand?

            There are a million ways that this can be accomplished. Use your imagination.

    2. The problem with truly individual health insurance is that it is priced based on individual risk. That sounds great until you realize everyone who doesn’t die young of a quick death will eventually be a bad risk. Worse still, unlike life insurance that you need the least generally when you are the worst risk, health insurance is the opposite. You need it the most when you are the worst risk.

      1. There is no reason, if they were free to do so and not dissuaded by bad incentives, that people couldn’t voluntarily form organizations to pool their risk and distribute costs, in much the same way as employer-provided insurance does now. There is no difference between your employer paying for it and giving you the money to pay for it yourself, except for the tax laws.

        1. Yes there is. People wouldn’t form those organizations because it would be difficult to get the risk pool right. Why would healthy people join? The rational course would be to game the system and only join after you got old and sick and take your chances when young and healthy.

          Beyond that even if such organizations are formed, you are right back to shielding the cost of health insurance just like it is now with employee provided insurance. I am not paying for my doctor visit, my insurance company is.

          The Libertarian jihad against employer based health insurance is so misplaced as to border on the bizarre. They don’t seem to understand that not every market looks the same. It maybe operate by the same laws as all of the rest but the nature of the product and the information available to the consumers can often be different and produce a different looking market.

          1. Wasn’t there a group of doctors that offered a pre-paid medical plan in NY, but it got shut down because it was ruled they were engaging in the insurance business, without the cartels blessing?

            1. Don’t know. If so, that is bullshit. The insurance cartel and the harms associated with it have nothing to do with employer provided health insurance.

              The problem more than anything is licensing laws and restrictions on people’s ability to create more innovative ways to provide health care. That is a totally separate issue from employee provided health insurance.

              If you want to get rid of the various licensing laws and make it easier for people to provide medical care, you will get my support. Doing that however doesn’t involve going after employee provided insurance.

          2. There is nothing wrong with employer-based health insurance on its face. There is something VERY wrong with the tax laws that strongly favor it.

            If getting insurance from their employers is what people want, then it will happen without the tax incentives.

            If we are waging jihad, it is against the market distortions that create the very same problems that more market distortions are constantly “needed” to “solve”.

          3. You could establish rules that you can’t join after a certain age. Or you can only buy your way in by paying back-premiums.

            1. Sure you could. And you would then have the same problem of people not paying for the full cost of their health insurance you do now. It would just cause all of this disruption and not solve anything.

              1. So if we get the same outcomes with and without government interference, then why is government interference justified?

              2. Well, obviously you would have to exclude certain expensive pre-existing conditions.

                It would have to be a sliding admittance period, as you get older, you have to shell out more and more to get into the co-op. Eventually, it would be so expensive that you may as well just pay for your own health care.

                But just like insurance, that incentivizes people to join early. Because it would ultimately be the best deal.

                You just make sure that the terms of late entry are sufficiently punitive that it incentivizes joining in your 20s.

      2. If people are worried about their rates going up when they become a worse risk, that is a market opportunity for someone to sell a product that is guarenteed to NOT go up for a higher price.

        I.e. You want insurance at a fixed, inflation pegged rate for the next 5, 10, 20 years? Pay more when you are young and healthy and stay current.

        The market can solve any problem John, if you let it.

        1. Not it wouldn’t Hazel. See term life insurance. No one sells term life insurance that lasts forever. Eventually your risk gets such that the rates go up. The same would be true of health insurance. The market is not solving for that problem.

          1. Who says it would last forever?

            Look, in a certain sense, all insurance does is take your discounted expected future costs and bring them into the present. The longer your time horizon (the less you discount the future), the more you can bring future costs into the present. The time horizon is just how far you can predict into the future, and for the insurance company that just means how far they can predict the aggregate likely expenses of the risk pool. That gets easier the more people you have in the risk pool. But you can still do some fancy math and vary rates for people based on their particular risk factors. You can come up with insurance that’s good for a 1 year time horizon, or you can do it for 5 or 10 or 20. It will cost more, because the risk goes up and the aggregate expense of the risk pool goes up, but it’s doable.
            If there are enough people who are willing to pay enough extra for insurance that covers you in 5 or 10 or 20 year chunks, then someone will provide that service.

  13. So OGL will need legal authority to drop the employer mandate.
    How many GOP congress critters have the balls to vote to not drop it?
    You think their business contributors would be happy? So the employer mandate goes away, Obamacare will cost a shit-ton more in taxes, and the cry will go ever larger to repeal it and replace with single provider which all “responsible civilized nations” have. Oh, and death panels too.

  14. I am conflicted.

    Obama has no legal mechanism to unilaterally end the mandate.

    Ending the mandate would help decouple employment from insurance. Didn’t Obama call McCain a nut for advocating this?

    I have super awesome employer-paid insurance. I’m not sure that would translate into an offsetting pay raise.

    1. I have super awesome employer-paid insurance. I’m not sure that would translate into an offsetting pay raise.

      That’s really the only issue with this. 90% of the population would drop their employer coverage and buy their own in a heartbeat, if they knew they would get an offsetting pay raise.

      I would be totally happy to have a “transitional” bill mandating that the employer offer a pay raise equivalent to the per-employee price of the insurance plan to any employee that wishes to drop out and buy their own health insurance. Either on the exchange or not. Let people opt out of their employer sponsored plan with a level playing field.

  15. “It will need a basis for its legal authority as well.”

    Why? They haven’t let the law stop them or even slow them down in 6 years. Why would you think they’d start now.

  16. I’d have figured out intermittent trolls would aver to this scandal’s fakeness or to the president’s bold masterstroke in postponing the mandate. Tony? PBP? Paging shills, paging resident shills, is anyone picking up?

  17. Do we ever reach a point where selective enforcement of this piece of crap becomes a legal reason in and of itself to strike the whole thing down?

    Something like “see this law is so bad, that it can’t be enforced in any constitutional way, therefore it’s unconstitutional, even if the penaltax part is totally an enumerated power?”

  18. This is one of those thing that makes me think that Obama might be some sort of secret Libertarian Manchurian Candidate.

    The employer-based health insurance system is the root cause of all sorts of perverse consequences in the health insurance market.
    Getting rid of it should be the holy grail of libertarian health care policy.

    Step two is eliminating the tax incentives favoring it.
    Step three is reducing the minimum coverage requirements to just a bare-bones catestrophic plan.
    Then we gradually chip away at the rest of the ACA, and we end up with a sane, healthy individual market.

    1. If that is the order in which you think things should happen, then I can understand John’s objection.

      Libertarianism should not take a position one way or the other on a particular system, as in general most systems are formed by people in response to the incentives they are given.

      Instead, we should address the incentives and seek to make them less perverse. If people want their employers to provide health insurance, then they will do so without the tax incentives (and better yet, without the taxes).

      1. Let me clarify the second sentence. I am saying that we should not try to bust people for finding ways to live under the laws, but rather should address the laws that make people do such things.

      2. The point of my objection is to state what I see as political reality. Right or wrong, people will take single payer if the price of the free market is not being able to afford health insurance if they get sick or old.

        1. There is a difference between recognizing your opponent’s argument and conceding it.

          Health care is a valuable service that can only be effectively provided by highly trained professionals with highly specialized equipment and facilities. To talk about it as a “right” is so comically asinine and childish that it would be hilarious if it wasn’t so disturbingly common.

          Anything the government can force people to do, they can do on their own without being forced. But if they choose not to do such things, then they should suffer the consequences.

          If we are going to concede that people should not be responsible for the consequences of some of their choices (or more honestly, that some people should be able to shift the burdens of their choices to others), well then where do we draw the line?

      3. I should have said

        Step One is getting rid of the mandate.
        Step two is getting rid of the tax incentives.

        Barring either of those I believe that employer based insurance would be dead in 10 years.

  19. I see the TOP MEN still don’t understand what “regime uncertainty” can do to the economy.

    Still, I suppose they think it’s better to be proven “correct” than to admit error, regardless of how bad the consequences are to everyone.

    Shockingly enough, it’s almost as if TOP MEN are just as prideful as the little people they want to control.

  20. Currently, the cost of healthcare borne by employers is deductible form taxable business profits. In other words, a dollar spent on employee healthcare generates 35 cents of corporate income tax reduction for a corporate employer. I doubt Congress would be willing to pass on tax benefits of that magnitude to people who purchase health insurance individually.

    Abolish the business mandate and some millions of people currently insured by business employers will be dropped. Some, but not all, will get a salary increase. The Obama administration will then blame the inability of employees to keep the health benefits they like, on private employers, drawing attention away from cancellations driven by the fact that many private policies do not meet ObamaCare requirements.

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