After several years of handing out waivers to exempt employers from the requirements of ObamaCare, canceling another part of the bill, and delaying the exchanges that would offer a range of plans to small businesses by at least a year, we now learn that the employer mandate will also be delayed until, well, after the next election. The Administration obviously wanted us to know about this because they announced it in a Treasury Department blog, on the Eve of the Fourth of July.
The mandate would have required any firm with more than 50 full time employees to offer insurance that meets the standards of the new health czars or pay a $2,000 penalty per employee. It was supposed to take effect in January of next year.
Is this a big deal or not? Letting it leak out like they did suggests that the Administration can't quite decide what they think about it. Kevin Drum, voice of the Administration at Mother Jones, thinks it's no big deal because the employer mandate was no big deal. Then he offers us two rather different explanations of why that mandate was in the bill.
The employer mandate requires big employers to offer insurance to their employees. Most big employers already offer insurance, so the primary idea behind this wasn't to force laggards to step up to the plate. The idea was to maintain the status quo and make sure that employers currently offering insurance didn't drop it once Obamacare started up.
Okay. That makes it sound important, but maybe the delay won't matter much. Then he adds the following:
If the employer mandate hadn't been in the bill, CBO would have scored its cost higher, which would have meant higher offsetting taxes. That would have made it a tougher sell.
So the employer mandate was in the bill largely (if not entirely) because it allowed the President to say that the bill costs X instead of X+Y. That makes the mandate look like a bit of window dressing. This is apparently what you have to concede if you want to argue that the delay doesn't matter.
Yuval Levin at The National Review observes that ObamaCare is a big machine with a lot of moving parts that depend on one another. Consider the "exchanges" that are supposed to begin operating in three months, in order to offer a range of options for insurance, along with subsidies to anyone who cannot otherwise afford it.
Under the law, eligibility for exchange subsidies depends on an individual not receiving an affordable offer of qualified insurance from an employer. If employers will now not be required to report on their insurance offerings in 2014, I don't see how the government will be able to determine eligibility for subsidies, and therefore how the exchanges will be able to function.
Making subsidies available without proof of eligibility would be very expensive and destabilizing to the insurance system, and would also require the retraction of such subsidies if the employer mandate ever does return. Coming up with other ways to prove eligibility would be very difficult at this late stage (as exchanges are supposed to start operating in three months), and would also be totally lawless—though I recognize that is a rather quaint and old fashioned concern in the age of Obama.
If Levin is correct, this delay is at least a temporary train wreck in the making for the implementation of the law. Moreover, it dispirits the supporters of ObamaCare while giving its opponents new evidence that it is a disaster. Worse still, it reinforces the obvious truth that any part of this law is now negotiable.
Tthe central proposition of defenders of the law has been that continued conservative opposition to it is a denial of the basic reality that the law is on the books and will be implemented. But apparently, the administration does not think of the law as a done deal. They believe they can pick and choose elements to implement or to ignore, and think the nature of the health-care system in the coming years is still an open question.
Yes. Everyone out there whose interests are adversely affected by any provision knows full well that the Administration can gratify them simply by choosing to do so. The Administration can hardly say that the law is the law, because it can obviously rewrite the law on a whim.
So why, if the employer mandate is no big deal, as Drum drums, did the Administration decide to delay it? The only answer is that they think that conservative critics of the employer mandate might be dead spot on. What do I do if I am an employer and I do not want to come under the mandate? I have three obvious options. One is to dump my insurance coverage for my employees and pay the fine. Would this make economic sense? No one knows for sure, yet. Another is to reduce my employee's hours to 30 or less a week, so they aren't full time. A third is to make sure that I don't have more than fifty full time workers. How many employers would have chosen one or more of these options if the mandate had come into effect in January of an election year, as scheduled? The Administration doesn't want to find out.