Health Insurance Report™ helps you track and analyze legal, legislative, and regulatory developments affecting the health-insurance industry throughout implementation of the Affordable Care Act...
By Sara Hansard
June 9 — Over the past month the Urban Institute and Washington and Lee University law professor Timothy Jost have suggested considering repealing or changing the Affordable Care Act's employer mandate, a major provision intended to shore up the employer-sponsored health insurance system in the U.S.
Both the Urban Institute and Jost have been supportive of the ACA, although the Urban Institute doesn't take policy stands. But the prospect of making major changes to the employer mandate concerns the head of the Commonwealth Fund (CWF), who argues the ACA's individual mandate requirement could be undermined. Indeed, Rep. Todd Young (R-Ind.), sponsor of legislation (H.R. 2575) passed by the House April 3 by a bipartisan vote of 248-179 that would change the definition of full-time employment under the ACA, agrees that would likely be the case. The CWF also doesn't take policy stands, but it has been supportive of the ACA.
CWF President David Blumenthal and David Squires, a senior researcher at the CWF, authored a blog posting June 4 titled The Employer Mandate: Essential or Dispensable? in which they argued that repealing the provision may erode the employer-sponsored insurance system.
Continuation of the employer-sponsored health insurance system is necessary for most Americans to be covered, Blumenthal said. More than 150 million Americans under the age of 65 get coverage through the workplace, the blog posting said.
“The repeal of the employer mandate raises obvious questions from the standpoint of whether individuals should also be mandated,” Blumenthal told Bloomberg BNA June 6. ACA supporters agree that the individual mandate that most people carry health insurance or pay a fine is critical to the success of the law, he said. “But I don't think that point will carry the day once we have a serious conversation about repealing the employer mandate.”
“It's inequitable if we provide this sort of relief for employers and don't provide that same sort of relief for individuals.”—Rep. Todd Young
“He's right,” Young told Bloomberg BNA June 9. “It's inequitable if we provide this sort of relief for employers and don't provide that same sort of relief for individuals.”
The employer mandate has “resulted in the unintended consequence of causing your lower-income hourly workers to lose the number of working hours they need to pay their bills,” Young said.
In addition, the employer mandate provision, which the Obama administration has delayed from the 2014 start date required in the law, also requires an accounting burden for affected employers, Young said. Under the law, employers with at least 50 full-time employees must offer minimum essential, affordable coverage or they are subject to large fines.
Law professor Timothy Jost, who is also a consumer representative to the National Association of Insurance Commissioners, posted a blog June 4 on the Health Affairs journal website titled Repeal, and Replace, the Employer Mandate. He argued in the blog that an alternative Congress should consider is the version of the employer mandate that was part of the House bill when the ACA was enacted in 2010. That provision would have required employers to spend at least 8 percent of payroll on health benefits or pay the difference between what they spend and 8 percent as a tax. Small employers would have been required to pay a smaller percentage of payroll. The Congressional Budget Office projected that provision would raise $135 billion over 10 years, the same amount raised by the current employer mandate.
“The employer mandate has just turned out to be very complicated in terms of the requirements that it imposes upon employers,” Jost told Bloomberg BNA June 6.
“It's having at least some adverse impacts on the labor force,” including reducing workers' hours below the 30-hour definition of full-time work and keeping the number of employees in a company below 50 to avoid the mandate altogether, Jost said.
Further, “It's so easy to evade,” Jost said. Employers can avoid the mandate by offering “barebones” plans that meet the law's requirements for “minimum essential” coverage, he said. “It's important that employers stay in the game,” he said, adding that they “most probably will anyway” in order to continue to attract and retain employees.
Jost's blog followed publication of a brief released May 9 by the Urban Institute titled Why Not Just Eliminate the Employer Mandate?. Eliminating the employer mandate would remove labor market distortions, lessen opposition to the law from employers and have little effect on coverage, the brief said.
Kevin Kuhlman, manager of legislative affairs at the National Federation of Independent Business (NFIB), told Bloomberg BNA June 6 that talk of changing the employer mandate from ACA supporters and groups that have backed the law “gives us hope and optimism that there will be some bipartisan opportunity for some relief from the provision.”
The NFIB opposed the ACA, and it has advocated for repealing the employer mandate as well as for enacting H.R. 2575, the proposed Save American Workers Act, Kuhlman said.
Repealing the employer mandate “would take away a significant employer piece of opposition,” Kuhlman said.
“There are still other things we could focus on, instead of these disruptive mandate and compliance responsibilities,” Kuhlman said. Large employers as well as small companies agree that reporting and verification requirements companies face to show they are in compliance with the law's coverage provisions “will be costly and burdensome,” he said.
Repealing the employer mandate “wouldn't take away the opposition from the employer community,” Kuhlman said. “But we would then have a laser-like focus on affordability of health insurance.”
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