Obamacare: Employer Mandate Delay Will Have Little Effect

Obama“It’s No Contest: The [Affordable Care Act’s] Employer Mandate Has Far Less Effect on Coverage Costs Than the Individual Mandate,” reads the title of a “timely” analysis of the Obama administration’s one-year delay of the implementation of employer penalties written by the Urban Institute.

Since the delay announced earlier this month, Republican lawmakers have argued that the individual mandate should be postponed as well. House Majority Leader Eric Cantor, a Republican from Virginia, said at a press conference that House Republicans would work on legislation this month to eliminate that requirement. “I never thought I’d see the day when the president, the White House came down on the side of big business but left the American people out in the cold as far as this health-care mandate is concerned.”

As it was originally written, the health care reform would penalize employers with 50 or more workers who did not provide coverage to full-time workers, where full-time is considered to be 30 or more hours per week.

“Some viewed the employer responsibility requirement as a key part of the ACA and the penalties as being an important tool for securing employer based insurance coverage once other reforms to the nongroup market are implemented,” noted the report. “However, our analysis shows otherwise.”

Alluding to the comments made by House Republicans, the report also noted that many have argued that it is unfair to leave the individual mandate in place while delaying the employer portion of Obamacare. While the analysis did not touch on the fairness or unfairness of the legislation’s various requirements, it did find that the different requirements have dramatically different implications for cost and coverage under the reform.

Using the Urban Institute’s Health Insurance Policy Simulation Mode, the study’s authors — Linda J. Blumberg, John Holahan, and Matthew Buettgens — compared the distribution of coverage as if the Affordable Care Act was fully implemented, implemented without the employer mandate, or implemented without the individual mandate. The results showed that the delay of the employer mandate had almost no effect on overall coverage or on the distribution of that coverage across public and private sources of insurance. Furthermore, the delay of the employer mandate would also have little effect on government spending on subsidies or Medicaid, but it would result in a small reduction in government revenue.

However, eliminating the individual mandate would significantly increase the number of uninsured when compared to the full implementation of Obamacare. A postponement in this arena would “undermine a critical component of the coverage expansion in the ACA.” The expansion of Medicaid, insurance market reforms, and federal subsidies are meant to help those with modest incomes purchase private insurance via the health insurance exchanges. Obamacare’s individual coverage requirement would provide stability to insurance pools and financial access to adequate coverage for a large percentage of Americans — meaning large numbers of young, cheap-to-insure Americans are needed to sign up in order to balance out the sicker and correspondingly more-expensive-to-insure enrollees.

According to the report, these findings are consistent with the evidence provided by Massachusetts, which has served as a case study. In that state, health care reforms were launched in 2006.

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