Obama on the Employer Mandate: ". . . never mind"

The Obama administration quietly announced on Tuesday that there will be a one-year delay—until after the 2014 midterm elections—in the implementation of the employer mandate, the provision of the Affordable Care Act (ACA) that requires employers with 50 or more employees to provide them with health care coverage or pay a fine. The decision leaves intact the individual mandate, which requires most Americans to have health care in 2014 or pay a tax penalty. Employers get a reprieve, but not workers.

The New York Times quotes Sara Rosenbaum, professor of health policy at George Washington University, as follows: “I am utterly astounded. . . . This step could significantly reduce the number of uninsured people who will gain coverage in 2014.” It's hard to say at this point how many people will lose coverage. The Kaiser Family Foundation estimates that there are 230,000 firms with 50 or more employees who do not offer health insurance, employing about 1.4 million workers. It's unlikely that many of them will voluntarily offer coverage with the penalty for noncompliance removed. It's even possible that some companies that currently offer health care will drop it in 2014.

What will happen to those workers? They will be required to find coverage on their own or pay a fine. Those who do will most likely pay more for comparable insurance. One of the arguments in favor of the employer mandate is that businesses can negotiate a cheaper group rate than workers can obtain on their own. Those workers with lower incomes—$88,000 or less for a family of four—may be eligible for government subsidies, which is why some critics are complaining that this decision will cost the government money. However, the whole issue of subsidies quickly becomes very complicated. For example, people who would have been eligible for Medicaid under the ACA, but whose states—like Pennsylvania—rejected Medicaid expansion, will not be eligible for any subsidy, even though others in their states with higher incomes will be. We won't know until after the fact how many Americans will lose coverage, and therefore, how many will die, as a result of this action.

Photo by seiuhealthcare775nw

It seems likely that this decision will help to reinforce a central part of Obama's legacy: his reputation as a wimp who caves in easily to political pressure. Of course, in this case, the pressure came from a powerful source—U. S. corporations with 50 or more employees. These are the “corporate persons” who control both mainstream political parties—who, in effect, run the country.

Newspaper accounts attribute the postponement in part to threats from companies hovering around the 50 employee mark to lay off full-time workers or not hire new ones in order to avoid the employer mandate. But that threat is unlikely to go away next year, especially since Obama has caved in several times on various provisions of the law. Republicans, sensing weakness, are again calling for repeal of the ACA. It's certain to be an issue in the 2014 Congressional elections. Americans for Prosperity, the Koch brothers' advocacy group, is rolling out an aggressive new advertising campaign next week attacking Obamacare. “We think that once we incorporate the new bullet points about how the president is already delaying key aspects of the law, it will be even more effective,” said Tim Phillips, the group's president.

Of course, it was a huge mistake to ever merge health insurance with employment. Dave Steil, President of Health Care for All PA, has written about how inconvenient the employer mandate is for businesses. It may discourage the creation of small companies. It introduces needless and expensive complexity into the system—which is one of the things businesses are now complaining about. It distorts labor markets, for example, by giving employers reasons to discriminate on the basis of age, income and health status. It reduces individual choice, since your employer determines your coverage. It encourages employers to meddle in their employees health decisions, for example, by refusing to cover abortion. It reduces tax revenue, since the cost of coverage is tax-exempt. This in turn encourages overly generous coverage for highly paid employees—the kind that pays $100 a month for gym memberships. All of these problems could have been avoided with a single payer system that provides uniform coverage for everyone.

Update (7/12/13):

Not surprisingly, Republicans are trying to exploit the obvious unfairness of postponing the employer mandate but not the individual mandate. House Speaker John Boehner asked, "Is it fair for the president of the United States to give American businesses an exemption from this health care law's mandates without giving the same exemption to the rest of America?  Hell no, it's not fair." Republicans are calling for cancellation of the individual mandate as well, knowing full well that this will bring down the entire ACA. You can't have guaranteed issue—health insurance available to all regardless of preexisting conditions—without the individual mandate.

This latest Republican gambit is outrageously hypocritical. They bend over even further for corporate America than the Democrats. And just yesterday, Boehner and his gang once again ground their heels into the faces of the poor by refusing to fund the food stamp program.

You may also be interested in reading:

New Op Ed from State President Dave Steil

Tom Corbett to PA's Working Poor:  "Drop Dead!"  Part 3.  What Medicaid Expansion Would Mean to Pennsylvania