Tuesday evening, the Obama administration announced that it would delay by one year ObamaCare’s employer mandate, the law’s requirement that companies with more than 50 employees provide health coverage to all their workers, or pay a steep fine.
The law passed by Congress says that the mandate goes into effect in the “months beginning after December 21, 2013.” The White House has chosen to ignore the law, and “provide an additional year” before the mandate goes into effect.
But the employer mandate shouldn’t be delayed. It should be repealed. Policy analysts on both the left and the right believe that the employer mandate will harm the economy, and make it particularly hard for low-income Americans to find work.
It’s a real breakthrough for the Obama administration to implicitly acknowledge the harmful effects of the employer mandate.
In 2009, liberal blogger Ezra Klein described the employer mandate as “health-care reform’s worst idea yet,” because “workers from low-income families become more expensive than workers from high-income families.”
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Some conservatives have worried that if employers drop coverage for their workers, and those workers go out and get subsidized coverage through ObamaCare, federal spending will go up. But it’s important to remember that we spend $300 billion a year through the tax code to subsidize employer-sponsored health coverage.
In 2012, the Congressional Budget Office estimated that dumping 20 million additional workers onto the ObamaCare exchanges wouldn’t have an impact on the deficit, because the ObamaCare subsidies would be offset by the subsidies for employer-sponsored coverage.
Economists of all persuasions, including conservatives, have long argued that one of the main reasons that U.S. health care is so expensive is that we don’t pay for it directly. Instead of shopping for health insurance the way we shop for car insurance or life insurance, we let our employers—or the government—take money out of our paychecks and spend it on our behalf.
- We’d have a far more affordable health care system if we shopped for health insurance on our own.
- We’d have far lower premiums, because we’d buy the plans that suited our needs, instead of the plans that suit our employers. That’s why, today, employer-sponsored coverage is far more expensive than the coverage you can buy on your own.
It’s a real breakthrough for the Obama administration to implicitly acknowledge the harmful effects of the employer mandate. But a one-year delay won’t do much to encourage employers to hire more workers, if those employers fear that the mandate will hit them in 2015. Instead, Republicans and Democrats should work together to repeal the employer mandate altogether.
If you’re a fan of ObamaCare, you don’t need the employer mandate to make the law work. And if you’re an opponent of the law, you should want more people to buy coverage for themselves. That’s a core principle of free-market health reform.
Congress has already introduced a bill, with dozens of co-sponsors, to repeal the employer mandate. It’s called the American Job Protection Act, and its lead sponsors are Sen. Orrin Hatch (R., Utah), Sen. Lamar Alexander (R., Tenn.), and Rep. Charles Boustany (R., La.). “At a time when the unemployment rate continues to suffer,” says Boustany, “Congress must repeal this mandate and allow job creators to do what they do best: expand business and create jobs.”
Some conservatives argue that we shouldn’t “fix” ObamaCare, that we should let the law fail. And it’s certainly true that it’s not the Republicans’ job to bail Democrats out of their own mistakes. But real people, in the real economy, are suffering because of ObamaCare’s employer mandate. We owe it to them to repeal it.