Postponement of “Employer Mandate” Highlights Obamacare Troubles

Postponement of “Employer Mandate” Highlights Obamacare Troubles

-Christopher Carroll

Much to the surprise of many, the Obama administration announced on Tuesday that it was postponing until 2015 the Employer and Insurer Reporting Requirements portion of the Affordable Care Act, fueling skeptics of the ACA and striking fear in the Act’s  devotees. This postponement is bad news for Obamacare, contributing further example of how the President has lost his 2013 agenda and pointing underlying vulnerabilities of the ACA.

Reception of the news has been mixed. Some believe that the fears are much ado about nothing, while others are convinced that a rock has begun to roll down a slippery slope.

Assistant Secretary for Tax Policy Mark J. Mazur, explained that concerns that the complexity of the ACA and the approaching deadline of the mandate where too onerous for businesses, convinced the administration to postpone the requirement so as to “effectively” implement it down the road.

The postponement, explained Mazur, is meant to simplify the reporting system over the next year and to “provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”

Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)

The “employer mandate” is meant to be an additional incentive for businesses exceeding 50 full-time employees to provide healthcare coverage to their employees rather than foist their employees onto Obamacare’s subsidized insurance exchanges. However, while the mandate is certainly an important tool to prevent insurance holes in the ACA, the mandate is not an exceedingly important portion of the act overall due to the additional labor market incentives businesses will find themselves subject to.

Mr. Mazur and others, Brian Beutler of Talking Points Memo among them, believe that the temporary suspension of the “business mandate” will not prove to be overly impactful upon the short-term prospects of the ACA. Their belief is that because most businesses large enough to employ 50 people already provide health care and, crucially, that because the ACA establishes labor market incentives anyway, that the “employer mandate” won’t be overly missed between October 2013 and 2015 anyway.

Meanwhile, other writers worry that removal of the business mandate will have two negative effects: opening a coverage hole big enough for businesses of all types to slip through, and starting the ACA, an already immensely complicated bill, off on the wrong foot.

In the end, both schools of thought are right. Postponement of the mandate will not provide immediate problems for the ACA. Businesses will find that when in order to attract top talent from a pool of people required to obtain insurance somewhere, it is in their interests to provide insurance themselves. However, those who fear that the postponement will leave a gaping whole in the ACA are not irrational, for any business not worried about the talent of their labor force could decide for the next year not to provide anything, thereby forcing individuals to either obtain insurance on their own or face paying a tax themselves.

The fact of the matter is that the postponement is bad news for the Affordable Care Act. It not only points to a rocky road ahead as unforeseen potholes and ditches in the bill are patched up, but the mandate itself is hard to implement and could have a negative impact on the economy in the long run. Already today, buried within otherwise good employment rate news, uncertainty about the effects of the Affordable Care Act on businesses is making the market uneasy. More tangibly, while incentivizing large firms to insure their employees, it will become a disincentive for smaller business to grow beyond 49 employees, presenting a large wall that must either be avoided or scaled.

Obama calling lawmakers about healthcare bill (Photo credit: Wikipedia)

This last point is dangerous for the ACA and must be addressed, both for the sake of Obamacare and for the sake of Obama’s legacy. The Affordable Care Act could become, or lead to, a transformative rebalancing of American society, where the health of our friends, neighbors and fellow citizens is not a matter of who can afford care, but of how we are cared for. But that transformation will be sullied, if it comes at the expense of the economic strength of our communities and the economic wellbeing of our citizenry.