The Right Prescription

The Employer Mandate Is a Goner

The Left finally abandons one of its dumbest ideas.

By 6.5.14

UPI (Organizing for Action ‘Obamacare Summit,’ Nov. 4, 2013)
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Conservatives have long known that Obamacare’s employer mandate, if implemented, will create harmful distortions in the labor market and damage the economy. The mandate will force small employers to rebuff workers they would hire in its absence, and it will incentivize large employers to replace full-time employees with part-timers. When conservative policy experts and business groups first pointed this out, however, Obamacare supporters robotically recited the usual canards about close-fisted capitalists who value profit more than healthy employees. But a funny thing happened on the way to the midterms — the President delayed implementation of the mandate until after the election.

Why, if it presents no potential harm to workers or the economy, would the President defer implementation of this particular provision of Obamacare? The answer, of course, is that the pain inflicted by the mandate on real people would inevitably hurt the Democrats next November. His congressional accomplices thus went to the White House and implored him to save their sorry political hides, whereupon he reluctantly and illegally delayed the mandate’s go-live date. This, however, put Obamacare’s pimps into something of a bind. Having assured the public that conservative warnings about the mandate amounted to little more than fear mongering, they were suddenly obliged execute a dizzying verbal pirouette.

Now they sound a lot like those knuckle-dragging conservatives and greedy capitalists they once denounced. Timothy Jost, longtime pitchman for the President’s “reform” law, is a typical example. In a recent post for the Health Affairs blog, Jost admitted the following: “Small employers approaching the 50-employee threshold have reportedly constrained growth to avoid becoming subject to the mandate. Some employers have cut the hours of part-time employees to below 30 to avoid having to offer them coverage.” Sound familiar? Jost then forces his hapless readers to slog through another zillion or so turgid paragraphs before he finally gets to the point: the employer mandate must be repealed and replaced.

But the real death knell for the employer mandate came last month, when the left-leaning Urban Institute published a report titled, “Why Not Just Eliminate the Employer Mandate?” Like Jost’s windy piece, the report gives one a sense of déjà vu, an eerie feeling that we have been here before: “Creating arbitrary thresholds (e.g., potential penalties for firms of 50 or more workers not providing coverage for employees typically working 30 or more hours per week) for financial requirements will change the employment decisions… and at least some workers will be adversely affected by them.” In the lethargic lexicon of the liberal think tank, “some workers will be adversely affected” means “famine and pestilence.”

And it gets worse. The people who would suffer the worst consequences of the employer mandate are low-skilled, low income Americans. The mandate, if implemented, will require all employers with more than 50 employees to offer insurance to full-time workers — or pay fines. But not all employers with 50 employees can afford to offer insurance. And, as the Urban Institute puts it, “Because the non-offering firms are much more likely to be firms dominated by low-wage workers, low-wage employees will bear the greatest brunt of the penalties imposed.” In other words, the government-imposed costs of a company’s noncompliance will fall back on the low-income employees who can least afford to absorb them.

The Urban Institute report has finally caught the attention of the liberal media, and a variety of Obama-friendly outlets have produced editorials either advocating the repeal of the employer mandate or at least speculating on the feasibility of doing so. In this they are actually well behind a progressive writer about whom many conservatives, including your truly, have been less than kind. Ezra Klein, of all people, came out forcefully against the employer mandate last year. He wrote an uncharacteristically honest blog post titled, “Obamacare’s employer mandate shouldn’t be delayed. It should be repealed,” in which he pointed out that “the mandate gives employers a reason to have fewer full-time workers, and fewer low-income workers.”

If the thing is so bad that a dyed-in-the-wool Obamacare cheerleader like Ezra Klein denounces it, one can be sure that it needs to go overboard. So, what happens if the employer mandate is indeed repealed? According to the Urban Institute study, the negative impact would be minimal: “The number with employer coverage falls by 500,000, a relative decrease of 0.3 percent.” And a portion of that number would offset by other types of coverage. Many would get coverage via non-group policies and a much smaller number would end up on Medicaid. “The number of uninsured increases by about 200,000 people, a relative increase of 0.6 percent.” In other words, getting rid of the mandate would have almost no effect on patients.

The Urban Institute report concludes thus: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.” Thus, Obama-friendly publications like the Los Angeles Times ask, “Should we kill Obamacare’s employer mandate?” Conservatives have known the correct answer for years. It is YES! If progressive think tanks, liberal publications, and high-profile lefties have finally come around to the conservative position, we should take advantage of this unusual consensus. Kill the bloody thing now.

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About the Author

David Catron is a health care revenue cycle expert who has spent more than twenty years working for and consulting with hospitals and medical practices. He has an MBA from the University of Georgia and blogs at Health Care BS.