Repeal the employer mandate altogether

by on July 3, 2013 at 1:58 am in Current Affairs, Economics, Law, Medicine | Permalink

I agree with Ezra Klein, who writes:

Delaying Obamacare’s employer mandate is the right thing to do. Frankly, eliminating it — or at least utterly overhauling it — is probably the right thing to do. But the administration executing a regulatory end-run around Congress is not the right way to do it.

Ezra notes:

- By imposing a tax on employers for hiring people from low- and moderate-income families who would qualify for subsidies in the new health insurance exchanges, it would discourage firms from hiring such individuals and would favor the hiring — for the same jobs — of people who don’t qualify for subsidies (primarily people from families at higher income levels).

- It would provide an incentive for employers to convert full-time workers (i.e., workers employed at least 30 hours per week) to part-time workers.

- It would place significant new administrative burdens and costs on employers.

By tying the penalties to how many full-time workers an employer has, and how many of them qualify for subsidies, the mandate gives employers a reason to have fewer full-time workers, and fewer low-income workers.

We can only hope that repeal of this one part of the law is what the Obama Administration actually has in mind, though as Ezra notes Congress is not currently in a cooperative frame of mind.  Still, this way it has a chance of serious reexamination after the 2014 elections.

Evan Soltas offers relevant comment on how this will change implementation in the short-run, namely that it puts more burden on the exchanges.  Sarah Kliff comments on the politics, a very good post.  Here is one good quotation from a source: “Politically, it won’t get easier a year from now, it will get harder,” he said. “You’ve given the employer community a sense of confidence that maybe they can kill this. If I were an employer, I would smell blood in the water.”

My view is you don’t serve up a delay and PR disaster like this, on such a sensitive political issue, unless you really wish to derail the entire provision.

Ashok Rao July 3, 2013 at 2:13 am

Yep Josh Barro wrote about this a while ago; http://www.bloomberg.com/news/2013-05-28/obamacare-s-original-sin.html :

“President Barack Obama made two big promises during his first term that have tied his economic agenda in a straitjacket.
One was his mostly-kept pledge not to raise taxes on families making less than $250,000 a year — that is, 98 percent of Americans. The other was his promise about health care reform: “If you like your health care plan, you can keep your health care plan.”
The latter pledge forced Obama try to do two things at once: keep employer-based coverage for the 45 percent of Americans who have it, while getting coverage to the 17 percent of Americans who don’t have any at all. To achieve the latter, you have to offer subsidies to people who don’t get health care through work, which would ordinarily give employers a reason to stop offering coverage. So, Obama had to come up with a series of carrots and sticks to induce employers to keep offering coverage — and those sticks and carrots are about to cause all sorts of economic distortions.
The main stick is the employer mandate: Large employers who don’t offer coverage will have to pay a penalty of $2,000 per uncovered full-time employee. This will discourage hiring, encourage employers to limit employees to part-time work, and give small firms an advantage over large ones. This last distortion is the real reason employers like Papa John’s are complaining about the law. Their beef is not so much that Obamacare will raise their costs as that it will do so without raising the costs of the small pizzerias they compete against, meaning they won’t be able to pass higher costs on to consumers.”

Andrew' July 3, 2013 at 6:04 am

People really think Obama’s problem is keeping his promises? That’s a serious question.

Andrew July 3, 2013 at 6:07 am

I liked my high-deductible/HSA that Rand proved worked fine, btw.

Jan July 3, 2013 at 6:44 am

You probably don’t have any serious or chronic health conditions, btw.

Jody July 3, 2013 at 7:39 am

And no one should have a car other than a Lexus.

Jan July 3, 2013 at 8:09 am

You mean no one should have car insurance that covers anything under $5000 worth of damage?

Dave T July 3, 2013 at 9:16 am

In some cases the HDHP is cheaper even if you spend the whole amount in your HSA every year because the plan encourages more intelligent health spending by others on the plan unlike the buffet style consumption seen on LDHPs.

RPLong July 3, 2013 at 9:28 am

He might not, but I sure do. And I agree with him. Time to revisit your priors?

Andrew' July 3, 2013 at 9:47 am

And if I did, so what. A good insurance mix wouldn’t fail if I and my cohorts were to do what works.

Andrew' July 3, 2013 at 9:50 am

“You mean no one should have”

You are projecting.

Ashok points to the previously reviewed link to Barro who mysteriously thinks Obama is sticking to a campaign promise that is hindering him that people get to keep the insurance plan they like.

Do I get to keep the insurance plan I like?

No. The whole thing is nonsense.

JasonL July 3, 2013 at 10:26 am

This line of thinking has always bothered me in the sense that – if you have huge recurring health costs, what premium should you be paying for coverage of those costs? Is it just supposed to work out that you pay $100 per month and a $20 co pay and every year consume $90k in coverage? That is, a $4k deductible is really that unreasonable?

bluto July 3, 2013 at 10:39 am

I’ve always carried a 3-5k deductable on my car insurance, I’d do the same on liability if they’d let me. Insurance is supposed to pool risks that are disasterous not $2000 fender benders.

Marie July 3, 2013 at 11:05 am

Jason L,
We have large recurring health costs. Insurance still comes out ahead with us, because they can negotiate cheaper rates on medical supply. So if we paid out of pocket our costs would be approximately $800 a month. We pay $1000 for our deductible and $270 a month for the kid with those costs, and insurance still is even or ahead, from what I calculate. For example, a glucose test strip that costs us $1 retail costs them probably a quarter of that.

Then we pay premiums and deductibles for other family members that are not a perpetual pull on funds. Family of five with one chronic expensive condition, they still make a ton off the rest of us.

Now, if we had a hospitalization or another catastrophic cost, insurance would then have lost the gamble and be behind. But only for the year. Over a lifetime, our insurances have made about $200,000 from our family. My husband and I are 10 and 15 years away from Medicare, so if we make it that long without bypass surgery, etc. insurance as a whole will have done well off us.

Jan July 3, 2013 at 11:30 am

We are moving from a non-health insurance system that screws sick people and lets the healthy get by with little contribution to a real insurance system that actually pools risk. If you’re wealthy, healthy and don’t like it, I’m sorry. Things are going to be different now. It’s not the best system that we could implement, but it is at least fairer.

Most everyone agrees not enforcing this provision is a smart move, but readers of this blog meet the decision with vitriol at worst, and whining at best.

mbutu o'malley July 3, 2013 at 11:56 am

Just to be clear Jan, if it screws me over to benefit you it is somehow a more fair system? But if it screws you over to benefit me, it is a less fair system? I just want to make sure I have the definition of fair correct.

Jan July 3, 2013 at 12:02 pm

Yeah, it is fairer if it screws you to benefit me. Personally.

mulp July 3, 2013 at 12:26 pm

“I’ve always carried a 3-5k deductable on my car insurance, I’d do the same on liability if they’d let me. Insurance is supposed to pool risks that are disasterous not $2000 fender benders.”

The largest sector of job creation is in food service with a minimum wages of $2.15/hr as long as tips bring the wage up to the standard minimum over all the hours worked, so a full time job means an annual income of only $16-17K before taxes, and about $15K after taxes.

Tell me that a $5K deductible would not be a catastrophic medical expense resulting in medical bills unpaid and thus shifted to others? Like you the high earner? How would the high deductible not be imposed on others for the tens of millions of low wage workers?

If someone earning a low wage fails to see a doctor for a year after noticing a lump or a strange mole or other symptom due to the cost of paying out of pocket to see a doctor, and then it turns out to be cancer, now at stage 3 melanoma requiring chemo instead of excising the tumor and regular inspections, do you think your costs to treat this low wage worker will be reduced?

Of course, what is most likely to happen is it progress to the point they end up in the hospital beyond hope with EMTALA requiring pointless care when euthanasia is the only rational treatment based on the economics.

Dan Weber July 3, 2013 at 12:32 pm

from a non-health insurance system that screws sick people and lets the healthy get by with little contribution to a real insurance system that actually pools risk

Whatever the benefits of having high-expected-cost people get subsidized by low-expected-cost people, it’s not absolutely positively not “real insurance.”

People with houses made of sticks pay more for wolf insurance than people with houses made of bricks.

Dan Weber July 3, 2013 at 12:38 pm

fails to see a doctor for a year after noticing a lump or a strange mole or other symptom due to the cost of paying out of pocket to see a doctor, and then it turns out to be cancer, now at stage 3 melanoma requiring chemo instead of excising the tumor and regular inspections, do you think your costs to treat this low wage worker will be reduced?

This is probably your imagination. Saying “we’ll save money through prevention!” is nearly always a bedtime story.

I’m sure there are some 10-dollar-bills lying on Prevention Street that have yet to be picked up, but so many have turned out to be Monopoly money that anyone should demand evidence of it working in the US.

(If you had a system that said “we will only treat things with a payoff of “at least N QALY per dollar” then you could start measuring this. When Democrats propose that, Republicans scream about death panels. When Republicans propose that, Democrats scream about putting profits over people. I’d love it, but have fun proposing it yourself.)

Marie July 3, 2013 at 12:43 pm

We’re poor with a child with a pre-existing (and expensive) condition. Like, near poverty level poor.

Didn’t like the previous system, but we were getting by.

So far, our situation has become much worse because of the ACA. More expensive, more limits on our choices.

Starting in January, all our current choices for insurance will either cease to exist or become far too expensive to purchase, most likely. We will be moved onto the exchanges and probably Medicaid.

If this means free health care for us, that may be an improvement, assuming we continue to be allowed to buy what the government funding won’t buy with the money we’ve spent before on premiums. If the costs of those things goes up, however, we’ll be in a worse situation. If the government runs out of money and it means no funding for us, or funding based on much reduced levels of care (seems likely, folks I know on Medicaid in this state currently seem to have dangerous levels of care, the kind of care that would put my kid in the hospital) I don’t think that will be an improvement.

The problem with ACA is not that it benefits the poor and ill over the rich and healthy. It’s that it does harm to poor, rich, sick, and healthy. As usual in a plutocracy, the very rich will find a way to mitigate the harm. The poor are, as usual, just out of luck.

Dan Weber July 3, 2013 at 12:45 pm

(I’ll need to add, to defend against the trolls, that there are already prevention schemes that save both lives and money in the US. But almost all the ones that we know work they’ve already been implemented. I believe that one of them still out there is nagging patients (especially diabetes patients) to take their meds, which doesn’t happen now because there is no medicare billing code for it.)

David N July 3, 2013 at 12:54 pm

@Jan you probably don’t pay for your own insurance, btw.

I have an HSA plan with an $11,600 deductible. Not because I’m young and healthy. The fact is that even if a member of my family got chronically ill and we had to pay the full deductible every year, the total of the deductible and the premiums is less than the total annual premium for even the least expensive HMO plan in my state. The HSA plan is a no-brainer whether you’re sick or not, if you’re paying for it yourself.

Jan July 3, 2013 at 1:04 pm

D-Dubs, It is absolutely insurance, but moving closer to social insurance, akin to the kind that rich countries provide for health care. The difference is that true social insurance is supplied via the government. Here it is designed in a way that the government sets the parameters, but doesn’t actually deliver the insurance for most people. We’ll get there, because people will realize that it makes zero sense to treat health care like any normal good, but until then it will be this unwholesome balancing act.

Jan July 3, 2013 at 1:07 pm

David,

I pay for my health insurance the same way that the majority of working Americans do–my employer withholds money that it would otherwise pay me and purchases my insurance, tax free.

David N July 3, 2013 at 1:12 pm

Jan,

If your employer was smart, they’d offer you an HSA plan and make contributions on your behalf.

mulp July 3, 2013 at 11:59 am

What about your “high-deductible/HSA” makes it non-compliant with Obamacare? When did your employer terminate that policy? And why did they terminate it prior to a requirement to do so?

T. Shaw July 3, 2013 at 12:48 pm

Obama’s handlers have miscalculated. They should be going “full speed ahead.”

“Investor’s Business Daily” by-line: “Obamacare Success Depends on the Young Being Stupid.” Ergo, it’s a shoo-in.

Jacob Lyles July 3, 2013 at 2:36 am

If the administration thinks a portion of the law will have bad consequences, what’s to prevent them from infinitely delaying its implementation? The executive branch seems to have broad discretion in the matter.

Mogden July 3, 2013 at 10:43 am

Since the government no longer follow the rule of law, it’s amazing what the king can achieve!

David Wright July 3, 2013 at 2:43 am

By keeping some of the cost of covering the newly insured off the government’s books, the employer mandate helped to make Obamacare look less costly. The incentives created by the employer mandate are terrible, but without it the government is going to be paying more in Medicaid and exchange subsidies to cover those people. The Democrats’ political calculus is presumably that this doesn’t matter: it was only important to make Obamacare look cheap in order to get it passed; once voters are getting the benefits they will insist that any price be paid to maintain them.

ThomasH July 3, 2013 at 6:43 am

@David Wright

ACA, once the Republicans pulled out of the negotiations, turned into a compromise between those who wanted to preserve the employer “provided” insurance as the main way for people to access the health insurance subsidy and those that favored more fundamental reform, a single payer or a Swiss system. The employer mandate was an unfortunate outcome that few really “wanted.” Removing it will help the system evolve more toward the Swiss system.

Jani July 3, 2013 at 6:48 am

Probably true on the balance, but isn’t there a counterweight in that the money those employers would have contributed to health insurance, which would not have been taxed before, will now be taxable as income to the workers?

Also, I don’t think the intent of this was to hide costs. It was based on the employer mandate in Massachusetts, which has actually worked fairly well in that particular environment.

Yancey Ward July 3, 2013 at 11:38 am

The CBO did the calculations for you:

God help me, I am linking to Little Ezra Klein

Rich Berger July 3, 2013 at 12:23 pm

Let’s just starting calling him Ezra Little in honor of his diminutive stature.

David Wright July 3, 2013 at 2:13 pm

+1 very relevant information at link. Thanks Yancy.

libert July 3, 2013 at 12:03 pm

Perhaps. But the magnitude is small. We’re talking about less than 1% of the workforce that will be affected by this in any way. And most of those people will probably not be eligible for subsidies anyway, as they are means-tested.

A back-of-the-envelope, high-end estimate would be $5 billion per year (=1 million people * $5,000 in subsidies per person, assuming all affected people get the full subsidies), or $50 billion over 10 years. Given CBO’s score was that the ACA would reduce the deficit by $140 billion over 10 years, this leaves plenty of breathing room.

Yancey Ward July 3, 2013 at 12:11 pm

The effect was predicted by the CBO to be much larger. See the link above.

However, Andrew is correct- if the effect really were minor, the administration never would have taken the political hit so such a minor inconvenience.

mulp July 3, 2013 at 1:38 pm

No, we are talking about the largest employer in the US, I think having past the USPS, Wal-Mart which is the only large US employer that does not provide employer health benefits. And if anyone thinks they provide employer health benefits, then why not demand Wal-Mart health benefits from your employer. The Wal-Mart health benefits offered to 90% of employees have a MLR of 60% or less with a maximum payout of about $5000.

And lots of Wal-Mart employees qualify for food stamps, and with Obamacare qualify for Medicaid (if the State expands it).

Basically, Wal-Mart is one of the most heavily government and corporate subsidized corporations in the US – government provides welfare like food stamps, Social Security, Medicare, and other businesses pay higher medical costs to subsidize the uncompensated medical care of Wal-Mart workers, plus their contributions to charities serving the poor, which Wal-Mart workers often are.

Dan Weber July 3, 2013 at 5:46 pm

In countries with single-payer health care, do you say all companies are subsidized, since the government picks up their workers’ health care bills?

Thomas Sewell July 5, 2013 at 4:05 pm

“lots of Wal-Mart employees qualify for food stamps” …

So what you’re saying is that let’s hammer the really poor employees the hardest with the fallout of this law?

Or do you believe in some sort of magic fairy that’s going to make them more economically viable if you significantly increase the cost of employing them? Let me guess, you think we could double the minimum wage without any impact, either, right?

You fail to notice that rather than subsidizing Wal-Mart, it’s their employees, “the poor”, and their customers, more of “the poor”, who are being subsidized.

bjssp July 3, 2013 at 3:19 am

As stated in the Wonkblog post, it was never going to affect all that many people, but then again, since it’s (presumably) not all that central to the law, delaying it seems reasonable.

Andrew' July 3, 2013 at 6:14 am

Then why delay it? Because that “1% of workers” that it effects today is going to be nearly all the new hires when fixing healthcare kicks in and fixes the economy.

bjssp July 3, 2013 at 11:24 am

We’ll see. If you’re right, hiring will increase a lot, no?

Yancey Ward July 3, 2013 at 11:40 am

Hiring probably has increased because of the mandate, but those jobs were part time, not full time. The delay for one year isn’t going to change this since the determination of who is who under the mandate is based on the year before implementation- this is why companies started the work force realignments late last year.

mulp July 3, 2013 at 1:54 pm

Small businesses aren’t covered by the mandate, and the big box stores long ago limited people to part-time – when first unemployed I spent time dealing with my property as is standard meaning lots of time in the big box stores “home improvement” and having lots of conversations with store employees who were also unemployed. None were full-time by policy because Home Depot or Wal-Mart or Lowes et al did not want them to qualify for the benefits offered to full-time employees. To get tax status for health benefits given to store managers, all employees of similar status must be given the same benefits. So, even in 2001-2003, the hiring of full-time employees was limited to avoid the costs of health benefits.

By your theory, Obamacare was forcing a shift to part-time workers beginning at least as far back as 2001.

But what was going on in 2001? well, that was the third year employer insurance premiums had increased by an average of about 10%.

Obviously, group insurers started in 1999 to raise their premiums in anticipation of Obamacare passing in 2009….

I just love how history for conservatives begins when a “liberal” law is passed and everything that follows is caused by that law. The “out of control” average 5% since 2010 increases in premiums is all caused by Obamacare because the baseline is 0%, not the 8-10% annual premium increases from 1998 to 2008.

kebko July 3, 2013 at 3:27 am

So, Obama is saying that everyone will be expected not to follow the law in this respect, but that he promises not to enforce it. I don’t think this is how civilization works. There is the existing notion that legislation has become so overbearing that we all commit crimes unknowingly, every day. So, I guess now we’re just making it explicit.

This is what a train wreck looks like.

Andrew' July 3, 2013 at 6:06 am

See Alex Tabarrok. The government wants “latitude.”

John Thacker July 3, 2013 at 6:12 am

We can only hope that repeal of this one part of the law is what the Obama Administration actually has in mind, though as Ezra notes Congress is not currently in a cooperative frame of mind.

Orrin Hatch has a bill filed to repeal specifically this one part of the law. Isn’t some of the evidence that “Congress is not currently in a cooperative frame of mind” the fact that the House keeps passing a variety of bills to repeal individual sections of PPACA as well as repeal it in its entirety? (And that all of these get lumped together into “the House has voted to repeal Obamacare X times?”)

John Thacker July 3, 2013 at 7:01 am

Ezra is, for example, in saying this:

Republicans won’t pass any legislation that makes the law work better. Improving the law, they fear, will weaken the arguments for repeal.

completely elides over the fact that several particular provisions of the law have been repealed, such as the 1099 reporting requirement. Even if he wants to argue that repealing those taxes are different than “making the law work better,” (and I can see that argument), surely repealing the employer mandate is of a kind more similar to repealing the 1099 reporting requirement or, say, repealing the medical device tax (something else that the House has voted for and the Senate voted for in a symbolic amendment.)

Jan July 3, 2013 at 8:06 am

You got it right in your second sentence. Almost all of these are pieces of the law that have simply been defunded or eliminated, not fixed or improved.

Another favorite of Congress has been raiding the Public Health and Prevention Fund for non-public health purposes. One piece of legislation actually proposed to ban the CDC or the agencies it funds from telling citizens that eating junk food may be bad for their health. These are the types of improvements that are being offered.

Cliff July 3, 2013 at 11:25 am

Sounds like an improvement to me. We’re going to waste money repeating the obvious?

Marie July 3, 2013 at 4:37 pm

Not to mention how how much pubic health has improved since the CDC, FDA, and federal school lunch program started telling people what they should eat. The only thing I like less than public funds going to programs that have no impact is public funds going to programs that have a huge negative impact.

Sometimes I will read a study about how kids whose parents smoke are more likely to smoke, or how kids in inner city public schools are more likely to wind up in prison as young adults, or how eating in your car correlates with weight gain, and I wonder if we would have cured cancer or something by now if we didn’t keep giving money to “scientists” and sociologists to research the obvious.

Rich Berger July 3, 2013 at 7:24 am

Obamacare was born of the arrogance of the left, which “knows” how to arrange our affairs. The entire structure is a misbegotten monstrosity – it cannot be improved by fine-tuning. It was passed in haste in the face of rising opposition, with bribes to win the support of key legislators. Its cost projections were fraudulent and much of its actual implementation was delegated to the administrative state. Our Potemkin president knew little about its contents, and Nancy Pelosi urged us to pass the bill to find out what was in it. It is sinking even before most of its major features are effective. And the latest affront to the rule of law is that the regime once again decides which laws it chooses to recognize. It needs to be repealed and if the Republicans had any balls, they would refuse to pass any legislation until repeal is signed by Obama.

The immigration bill is an attempt to repeat the same disaster.

Oh, and Ezra Klein is a third-rate mouthpiece for the regime.

mulp July 3, 2013 at 4:26 pm

Yep, those leftist Bob Dole, Mitt Romney, the Swiss citizens.

Better to go with the right wing Texan LBJ’s Medicare for everyone.

I wish those who attack every single national health care strategy in the world would explain in detail how you would design a health care system which deals with the poor and disabled, beginning with those born disabled to parent working for Wal-Mart and ot he low wage employers but not full-time at any of them because by 1990, full-time workers had to have benefits if you were to keep honest managers and supervisors, but the rest of the work force could not be provided with benefits within the business model. Thus, the retailers like Sears which had full time employees with benefits went bankrupt and were replaced by full-time part-time workers at the Wal-Mart model retailers.

A free market capitalist solution would be to declare the infant too big a liability and like a defective machine, the best option is dismemberment and sale of the parts if possible, and the rest ground up for fertilizer. Yet I have yet to see anyone call for such laws, instead doing the charity handwave. Well, Reagan administration policy was “private charity will do the job better” but the private charities have become a special interest group that lobbies for increased government spending, channeled through the private charities. Government welfare spending has increased almost in lockstep with the increase in private charity welfare.

Of course, what’s worse, the rise of these low wage workers has placed a burden on welfare programs public and private while making it almost impossible for Wal-Mart’s workers to even shop at Wal-Mart without food stamps, forced to go to food banks, Goodwill, the dollar stores, and payday lenders to keep the lights on. This then means the more upscale retailers and food vendors from Applebees to Starbucks never see any business from the low wage workers. Unless they are the graduates living at home with their parents and eating their parent’s food and covered on their parent’s employer family health benefits.

Dan Weber July 3, 2013 at 5:55 pm

how you would design a health care system which deals with the poor and disabled

Almost anything but our current system. It’s a huge Rube Goldberg machine and PPACA just glued some more kludges onto it, all those new pieces held together by something out of a Dr. Seuss book.

So, really, a system that deals with the poor and disabled? Here goes:

1. Terminate all FICA taxes that fund Medicare, and don’t fund Medicaid out of general revenue. Replace these with a VAT across the economy raising the same amount of money.

2. Terminate Medicare and Medicaid as is. Give the money that would be spent on those two programs to whatever commission you, mulp, want. They have the mandate to use that money to improve American’s health as much as possible. They can use market power but not government power (meaning, they can attempt to negotiate for lower drug prices from a manufacturer, but the manufacturer retains the right to walk away without worrying about their IP being invalidated) to try to achieve that as best they can. This is over $2000 per head in America IIRC, more than many European countries spend in total, so you should be able to do it.

3. Tax all employer-paid health care premiums as wages. If people don’t like the benefits of the program in #2, they get a $1000 tax credit to be applied towards their own health care are are not covered by #2.

There you go.

Edward Burke July 3, 2013 at 7:43 am

The Affordable Care Tax Act: STILL not affordable.

mulp July 3, 2013 at 4:37 pm

Did you consider Bushcare affordable?

Did you consider Newtcare affordable?

What did Reagan do to make healthcare affordable, other than set the US taxpayer on a trajectory to spend as much as Canada in total on a per capita and share of GDP basis?

Conservatives shut down all the Democratic and liberal attempt to reform healthcare in the US, but otherwise just oversaw explosive growth in health care costs in both the private and public sector.

Not one conservative has laid out a model health care system that isn’t based on lots and lots of hand waves.

Eg, if healthcare is going to delivered as “efficient” as Wal-Mart, doctors aren’t going to work for wages above $15-20 an hour, and forget benefits.

Myron July 3, 2013 at 8:00 am

I have to admit to being confused about this myself.

I remember in 2008 the big issue in the Democratic primaries that Hillary Clinton was in favor of the employer mandate, and Obama was against it. I think he even correctly cited the reasons that are making it unworkable.

Then when the Supreme Court reviewed the law, there was alot of speculation that they would strike down the mandate (though maybe this was just the individual mandate) and try to leave the rest of the law alone, and whether they could do something like this.

But anyway its been discussed for over five years, even among people favoring the general approach of the ACA, that this was potentially unworkable and maybe even unconstitutional. Democratic primary voters obviously weren’t sold on it enough to carry Hillary Clinton to victory over the mandate’s critic, Obama. So now people are discovering that there are problems with this provision?

(Not That) Bill O'Reilly July 3, 2013 at 8:35 am

The constitutional concerns were aimed squarely at the individual mandate; no one (to my knowledge) ever challenged the employer mandate, and if anyone did they got no traction.

mulp July 3, 2013 at 4:50 pm

You need to ask the insurance company executives and the conservative economists who designed Obamacare core design why the mandate is required. The design originates circa 1990 in the conservative wing of the Republican party, which admittedly is the leftist RINO wing today.

The huge complexity of Obamacare is it is the conservative camel of incorporating every Republican feature that we have heard about for decades: Let each State design and run its own. States rights,and tort reform led to yet more Federal funding to State to do yet another round of tort reform to cut costs by 30-50%. Managed care. High deductible policies with HSAs. Employer based. Individual buying on an exchange offering group coverage. Buying individually directly from insurers through brokers. State regulation of insurance. Changing the way care is paid for. Cut waste fraud abuse. Penalties for free riders.

Republicans did not offer “if you don’t have the cash and you didn’t sign up for one of the forms of means tested insurance, you do not get any medical treatment, other than free pure nitrogen to die painlessly.”

T. Shaw July 3, 2013 at 8:31 am

“Delaying Obamacare’s employer mandate is the right thing to do.”

Because there will be an election in November 2014 and the gangsters will lose everything.

Raising taxes in the midst of the Great Recession . . . imbeciles.

A Berman July 3, 2013 at 8:32 am

How much was the original motivation for the ACA to improve health care vs. to give the Democratic leadership an ego boost so they could compare themselves to FDR and LBJ? It appeared to those of us who were against it that the goal of the bill was the passing of the bill, nothing more.

mw July 3, 2013 at 8:37 am

If you avail yourself of Google, you could see what the history of medicare looks like: major modifications almost every two or three years for about 20 years following its passage.

It’d be fascinating to know what Medicare would look like if we only had its original 1965 legislation and then from that point on congress was replaced with the unadulterated uselessness we have now, so the program could never ever be modified again. That’s the comparison you want to make.

Urso July 3, 2013 at 12:20 pm

I genuinely don’t know the answer to this – was Medicare passed by a bare and temporary political majority, over a vociferous dissent by the opposition?

Because it seems to me that one of the main problems with the ACA was that it attempted to make huge, sweeping changes to the US healthcare system without the kind of broad political support necessary to see those changes through. It’s politically naive, at the very least, to assume that once one congress passes a law, later congresses (made up largely of people who *hate* that law) are under some obligation to do their best to achieve that law’s goals.

mulp July 3, 2013 at 5:00 pm

Do you seriously not understand the driving force behind the effort to pass the Republican health reform???

You were happy that health insurance premiums were rising 8-10% annually in the decade before the 2008 election cycle began??

You were happy as a small and mid-size employer that health benefits were unpredictable and killing your bottom line?

You were happy that if you got sick or in an accident and unable to work you were almost certain to become uninsurable in terms of covering your condition, and the only way to get care would be to “spend” all your family assets until your family is in poverty to qualify for Medicaid.

Democrats had tried simpler paths to a rational health care system, but Obama drove the adoption of the standing conservative Republican proposal of the previous two decades.

(Not That) Bill O'Reilly July 3, 2013 at 8:38 am

Highly off-topic, but does anyone else find curious Professor Cowen’s consistent use of first names for a lot of fellow bloggers? Ezra Klein, Felix Salmon, and Matt Yglesias spring readily to mind; on the other hand, he definitely does not do that for more established academics who blog on the side, like Paul Krugman and Greg Mankiw.

Something that’s always oddly bugged me.

prior_approval July 3, 2013 at 9:12 am

One group could significantly influence his career in several areas, the other not. Want to take a guess which is which?

Andrew' July 3, 2013 at 9:54 am

Again, you get it backwards.

libert July 3, 2013 at 12:11 pm

PA claimed that TC calls them by their full names because they can advance his career.

If you think he has it backwards, then are you saying that they can advance his career because he calls them by their full names?

Yancey Ward July 3, 2013 at 11:46 am

It would suggest to me that he knows and is friends with the ones he calls by their first names.

Walter McGrain July 3, 2013 at 8:41 am

“By tying the penalties to how many full-time workers an employer has, *and how many of them qualify for subsidies*, the mandate gives employers a reason to have fewer full-time workers, and fewer low-income workers.”

It also gives them an incentive to hire “provisional” citizens, i.e., illegal aliens given amnesty, since they don’t qualify for the subsidies.

jacobus July 3, 2013 at 12:00 pm

That the Democrats were starting to realize that this was starting to be a serious set back for immigration reform is the most likely explanation for the delay.

RPLong July 3, 2013 at 9:34 am

The only way out of this mess is to derail, delay, nullify, ignore, defund, repeal, and otherwise invalidate the hideous ACA, piece-by-piece. I don’t care where they start. Unlike my fellow commenters, I think it is a fine idea to eliminate all the little pieces that individually don’t make a difference; in sum total, the change will be significant.

I accept the fact that repealing the ACA is as politically toxic as passing it originally was. But I also accept the fact (fact, understand – FACT) that the ACA is an evil mistake, and that it has to go. I don’t care how it goes, so long as it goes. Whatever it takes: infinite delays, Congressional vote, I don’t care. Just get rid of it.

Rich Berger July 3, 2013 at 10:09 am

The only problem with this approach is that it accepts the lawless action of the regime. I hope some “progressive” group brings suit to stop the regime from selectively enforcing the law – if they do so, I will bring the popcorn for everyone!

JWatts July 4, 2013 at 12:39 am

Or any kind of group brings a lawsuit on behalf of those forced to pay the individual mandate penalty while employers are exempt.

Oreg July 3, 2013 at 9:58 am

Just get employers out of the equation completely! Their role in providing health insurance distorts the market in any number of ways, making it inefficient and costly.

The biggest obstacle to achieving this is probably the question how not keep the employers’ current contribution in the system. It would be straight forward to introduce a “health-care payroll tax” with equal revenue. Unfortunately, even this zero-sum option is blocked by Republicans’ childish insistence not to raise any tax whatsoever under absolutely no circumstances.

jeff fisher July 3, 2013 at 10:10 am

No, the biggest obstacle is that insistence by many Americans that we should have a “free market healthcare system”.

Whatever that means. They certainly don’t know.

T. Shaw July 3, 2013 at 12:42 pm

Just get the government (unaccountable/unaudited bureaucrats, central-planners, collectivists, technocrats) out of control over my health care and everything else, except maybe the (bankrupt) post office, roads, and (how many now?) wars.

MG July 3, 2013 at 10:02 am

Sadly, a blogger’s ability to reposition, reaim and refire an argument is not very useful to those who have to invest more than reputational capital (if even that is at risk in a world where “deas are mostly “presold” to an audience). Our governing elites seem to live in a similar world. To the rest of us must, to quote Michael Cannon: “The IRS’s unilateral decision to delay the employer mandate is the latest indication that we do not live under a Rule of Law, but under a Rule of Rulers who write and rewrite laws at whim, without legitimate authority, and otherwise compel behavior to suit their ends.”

mgs July 3, 2013 at 10:15 am

Ezra’s point about hiring full time or part time workers is erroneous. The threshold for the employer mandate is in “full time equivalents (FTEs)” rather than full time employees. It does not matter if you distribute 62 hours of work between 2 workers or 3, it is the same number of FTEs.

Mogden July 3, 2013 at 10:47 am

Another exciting aspect of this decision is regime uncertainty. Now not only does one have to contend with major laws that change every couple of years, but one has to consider what parts of passed statutes will be suspended at random times for political reasons.

T. Shaw July 3, 2013 at 12:45 pm

The US is a “third-world” country. I just insulted banana republics everywhere.

Marie July 3, 2013 at 11:14 am

It’s brilliant.
You look like the good cop, giving employers a break (by not enforcing an oppressive law you served them in the first place — how very Stockholm syndrome). Meanwhile, everyone is still mandated as individuals, and since you have pushed the cost of premiums up and pushed insurers out of the market, there will be a boatload of individuals and families newly without insurance (tons of employers dropping or reducing coverage, tons of families like ours buying our own insurance who can’t post-ACA). What will this lead to? A huge, huge number of people on the insurance “exchanges”. And once you have the majority of people in this country on some form of government health financing (Medicaid, Medicare, and insurance “exchange” subsidies) and the price of insuring outside the government is ridiculously prohibitive, you have de facto socialized medicine. Just relabel and move on.

The problem is funding, and like the federal program for folks with pre-existing conditions that has now *shut* to new enrollment because it ran out of money, the reach here will exceed the grasp. No problem for the feds, who will just use the chaos to push for more funding and within a few years we’ll have it all under the federal umbrella, well rationed and with thousands of extra government employees to administrate. But it’s going to be a rough few years for folks like me, who will lose the options we have now and likely not have stability for the new, braver options for awhile.

Rich Berger July 3, 2013 at 1:28 pm

I just realized the brilliance of Obamacare: you can jettison this part or that part and it still works. If you repeal it in its entirety, it will probably work like a charm.

Frederick Harrison July 5, 2013 at 7:27 am

People can’t take it anymore, economic problems are overwhelming, jobs are hard to come by, and public debt is getting worse. It’s about time that politicians wake up and realize that they need, like the specialists in the economic crisis Orlando Bisegna Index from New York who are very familiar with the problems of unemployment, lack of family purchasin power, and public finances and have solved these problems for counties in financial distress and gotten them out of debt and default

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