Support for killing Obamacare's employer mandate is growing.
The employer mandate is meant to be an incentive for employers to offer coverage to their workers by fining companies $2,000 for every full-time worker not given the chance to enroll.
This also turns out to be an incentive to have fewer full-time workers, which is a worry expressed by both Democratic and Republican legislators. The White House delayed the employer mandate by one year, citing administrative difficulties in setting up the new regulation. In the interim, there's been a growing debate over whether the employer mandate makes sense as a policy, and if it might be doing more harm than good.
The left-leaning Urban Institute put out a paper last month, making the case that killing the employer mandate would reduce insurance coverage by a tiny 0.07 percent. And earlier today, a relatively prominent Obamacare supporter wrote a lengthy piece for the journal Health Affairs advocating for scraping the provision.
Washington & Lee University Law Professor Timothy Jost does, however, have a slightly different take on the issue: he thinks Congress should replace the current employer mandate with the version from the House version of health reform. That would require companies to devote a certain percent of their payroll to health benefits, rather than tethering fines to each worker.
Jost and I spoke Wednesday morning about why he would like to see the employer mandate scrapped, what's been learned from its implementation and what a replacement could look like.
Sarah Kliff: How has your thinking evolved on the employer mandate, to the point of writing this piece in Health Affairs today?
Timothy Jost: I've been following the implementation regulations all along. One thing that has struck me over and over again is how incredibly complicated the employer mandate is. The reporting requirements, the determining who is a large employer, who is small, who is full time and part time is all a pretty burdensome operation And I think the Urban Institute paper really raises the question of is it worth the effort? What are we getting out of all the time and resources being invested in this?
SK: Was it clear that the employer mandate would be a mess when it was passed as part of Obamacare? Or is it something that has become more apparent with implementation?
TJ: It looked pretty complicated to begin with. It's become clearer and clearer over time that its a heavy lift, I'd say.
One thing that I think has become clear, and don't think it was clear to many people at first, is how little it actually gets you because of the skinny benefits that employers can continue to offer and still be considered to fulfill the mandate.
Then there's also the family glitch, where you have the possibility of companies offering insurance to the individual, and not the family, but still counted as fulfilling the mandate. That, in my view, was a misinterepation of the law. But either way, I think there's a whole series of issues here that could be improved by simply getting rid of the employer mandate and replacing it with an easier to administer version result.
SK: Walk me through the House proposal that you think we should be using instead.
TJ: It would require companies, as I understand it, to spend 8 percent of their payroll on health benefits. For smaller companies, it would be a smaller percentage. It was a graduated thing, that if your payroll was under a half million dollars, or some benchmark, you would pay a smaller percentage.
I don’t know if that’s the right percent. But it's just a much simpler thing to administer with some very basic requirements. And it would get rid of the problem of people trying to evade the regulations.
It also works out so the amount of revenue generated was estimated at the time to be $135 million [which is similar to revenue generated by the current policy].
SK: Why do you think we need a replacement? You mentioned Urban Institute's research, for example, which suggests that there would be a very small impact of coverage if the employer mandate repealed without another policy put in place.
TJ: I think my conclusion is a bit different than Urban's. I don't think that's a good idea because the employer mandate does in fact get us some things. It will increase the number of people covered and generates a huge amount of revenue. I don't think we should just repeal it, but we should be looking for alternatives that could accomplish more or less the same result without imposing anything like the same burden.
It's also worth pointing out that Urban's estimates are slightly different than the CBO. Urban estimated the number of uninsured would increase by about 200,000 without the employer mandate. CBO projected about 500,000 to 1 million. A million is a much bigger number.
Their estimate of lost revenue [from repealing the employer mandate] was $46 billion, but the CBO has estimated $130 billion and Rand said $150 billion. If Urban is right, then repeal on its own might be a possibility. But still, even $46 billion is a significant amount of money. If that had to come out of some other place that could be a real problem.
SK: Is this a policy the White House could accomplish on its own, or do they need Congress to pass something?
TJ: Congress would have to take action. I should say, I have not discussed this with anyone in the administration and do not have any reason to have any reason to believe the official position of the administration.
At the same time, their action in implementing the employer mandate seems to be a cry for help. They realize this is a real heavy lift and are looking for how to do it in a responsible way. It would be to their advantage to have this part of the ACA working, and not have this be a distraction.