More Delay of the Employer Mandate

Needless to say, I’m very disappointed in the latest move by the Obama Administration to delay the implementation of the PPACA:

Employers with fewer than 100 workers won’t have to provide health insurance until 2016 under Obamacare, as the administration said it would again delay a key requirement of the health law.

Larger firms have to cover at least 70 percent of the workforce starting next year, the Internal Revenue Service said in a rule issued yesterday.

The Patient Protection and Affordable Care Act envisioned as a cornerstone of its expansion of U.S. insurance coverage that employers with 50 or more workers would be required to provide health benefits to their employees. Under pressure from business groups, the Obama administration has weakened that requirement since July, first by delaying enforcement of the mandate until 2015. Many firms will have even more time under the new regulation.

Some supporters of the PPACA, like Ron Fournier are increasingly frustrated with the administration:

It’s getting difficult and slinking toward impossible to defend the Affordable Care Act. The latest blow to Democratic candidates, liberal activists, and naïve columnists like me came Monday from the White House, which announced yet another delay in the Obamacare implementation.

[…]

The win-at-all-cost mentality helped create a culture in which a partisan-line vote was deemed sufficient for passing transcendent legislation. It spurred advisers to develop a dishonest talking point—”If you like your health plan, you’ll be able to keep your health plan.” And political expediency led Obama to repeat the line, over and over and over again, when he knew, or should have known, it was false.

Defending the ACA became painfully harder when online insurance markets were launched from a multi-million-dollar website that didn’t work, when autopsies on the administration’s actions revealed an epidemic of incompetence that began in the Oval Office and ended with no accountability.

Then officials started fudging numbers and massaging facts to promote implementation, nothing illegal or even extraordinary for this era of spin. But they did more damage to the credibility of ACA advocates.

My criticism of the PPACA has always been that it was inadequate in addressing the real problem facing our healthcare system: rising costs. And, yes, costs have continued to rise—the rate of increase may have slowed but the costs are rising and not only has that resulted in ever fewer companies and individuals carrying insurance but it’s killing state and local governments which, in many cases, have no viable solutions to the problem.

The PPACA is the law of the land and unlikely to be repealed or even receive much in the way of maintenance for at least three years. Delaying aspects of implementation for what are manifestly political reasons makes it increasingly difficult to make a fair evaluation of what needs to be changed to make it workable. We need to take additional steps and that won’t be possible until we have a feel for the full implications of the law, which the administration’s most recent move has kicked further down the road.

24 comments… add one

  • ...

    Also bad is that employers are still going to have to jump through hoops despite the delay. They will now be forced to certify that they aren’t hiring or firing people solely for the purpose of avoiding the employer mandate.

    Link:

    Some lawmakers, though, have claimed that the mere threat of the employer mandate is causing companies to shed full-time workers in the hope of keeping their staff size below 50 and avoiding the requirement.

    Administration officials dispute that this is happening on any large scale. Further, Treasury officials said Monday that businesses will be told to “certify” that they are not shedding full-time workers simply to avoid the mandate. Officials said employers will be told to sign a “self-attestation” on their tax forms affirming this, under penalty of perjury.

    Anyone want to bet on how closely the IRS monitors firms that don’t donate to the Democratic Party for violations of this provision?

  • ...

    Sorry, botched the link.

    Here it is.

  • TastyBits

    Others can debate the merits Obamacare (or whatever it is now called). I would be interested in understanding how giving this much power to government is not going to result in an additional concentration of wealth.

    If I understand the opposing argument, this will result in less concentrated wealth because they will have less power to control the health industry. Am I missing something?

    My prediction is that all of these new found powers will used by the health industry through lobbyists to further concentrate wealth, but I could be wrong. Today’s large government has resulted in the dispersion of wealth. The poor are getting richer, and the rich are getting poorer. Oh, wait …

  • PD Shaw

    The last CBO report persuaded me that the employer mandate needs to go. The employer penalty increases labor cost for those up to 400 percent of the poverty level, in response to which the CBO predicts employers will reduce wages and full-time opportunities, causing these employees to withdraw from the labor market. This provision places too much hardship on the working class.

    What are the positives of the employer mandate? The most obvious appears to be get to get employers to pay for some of the costs of the new healthcare coverage, so that the government does not have to pay as many subsidies. But the CBO also opined that in the long-term employers will pass insurance costs onto the employees, in the same way the employer’s contribution to the payroll tax is passed on to the employee over time. So this is a short-term benefit, resolved in the long-term by wage growth below the previous trend.

    The employer mandate might give employees access to a type of insurance coverage it would not receive as an individual. For example, AOL might provide insurance coverage that would be better than (expanded) Medicaid. But that is not a feature of the mandate; AOL and other companies have been providing healthcare coverage before ACA. Its the companies that were not providing coverage before the ACA (or were in the process of dropping) that a mandate might help, but the mandate does not require comprehensive coverage from large employers, but “thin” coverage that meets the minimal actuarial value.

    So, I’m not sure what benefit the employer mandate has other than as a hidden tax on the employee.

  • What are the positives of the employer mandate?

    As long as the employer mandate stays on the books you don’t need to admit you made a mistake.

    My preference would be to tax employer-provided healthcare insurance as income but, then, I’m completely unreconstructed.

  • ...

    The employer penalty increases labor cost for those up to 400 percent of the poverty level, in response to which the CBO predicts employers will reduce wages and full-time opportunities, causing these employees to withdraw from the labor market. This provision places too much hardship on the working class.

    Feature, not a bug, for the elites in Washington.

  • PD Shaw

    Elipses, I wonder if it is even against the law to fire someone solely to avoid the mandate. A few minutes of googling was not illuminating, but its not uncommon for regulation to kick in at different sizes, and these regulations don’t even require the employer to provide insurance, so long as they pay the penalty.

  • ...

    PD, whether or not it is against the law, the language in the story bothers me:

    Treasury officials said Monday that businesses will be told to “certify” that they are not shedding full-time workers simply to avoid the mandate. Officials said employers will be told to sign a “self-attestation” on their tax forms affirming this, under penalty of perjury.

    Okay, so it isn’t against the law to fire someone to get under the 100 employee limit. Businesses will still be required to “certify” that they haven’t done so. What if they so “certify” that they RIFfed five employees to get under the limit simply due to business considerations, and then the IRS decides to investigate them anyway, determines against them, and the business owners/managers get brought to court on a perjury charge?

    Would the business have any recourse at that point? How would the IRS make that determination? And how much money would the business lose fighting the IRS (and quite possibly the US Justice Department) to try and prove the matter to the satisfaction of the courts?

    This “certification” nonsense just adds more complexity and uncertainty.

    And when we discussed these Presidential delays earlier, there was a question of the President’s legal authority to do this. Okay, so he can choose not to prosecute companies that don’t meet the conditions of the law at the scheduled time. That doesn’t mean he can’t change his mind later, or that the next President might decide to go after these companies on her/his watch, correct? Or does the President actually have the statutory authority to just implement the law or not as he chooses? That would seem to give a Republican President the option to simply suspend the law on her/his authority, right?

  • ...

    Adding this perjury bit to the business ups the stakes considerably.

    Also, I see that in the civilized world, California continues to fuck up the roll-out of its own exchanges. But hey, it isn’t like people will really make decisions based on which doctors are available, so there’s that.

  • Remember, too, Sarbanes-Oxley. Top management of publicly-traded companies can no longer plead that they didn’t know if the certifications say one thing and the reality is another.

  • PD Shaw

    Elipses, I can’t rule out that there is a law, but then why doesn’t the Administration simply say its against the law? If you say its against the law, you shut up employers from ever saying anything that could be used against the law.

    OTOH, asking a business to certify something that is irrelevant for tax purposes sounds so patently illegal that it wouldn’t be said without basis. And what about the Paperwork Reduction Act, the last protection against a Kafkaesque dystopia? Brazil?

  • PD Shaw

    @Dave, reducing the linkage btw/ employment and insurance is a feature to me, not a bug. But as I recall, the CBO predicted that employers will continue to discontinue providing insurance coverage, though not at the previous pace.

    There is an alternate world, where President Bartlett, realizes that the ACA is not ready for primetime and enters into negotiations with the Evil Republicans (TM) , “reluctantly” agreeing to eliminate or delay problematic parts of the ACA for objectives that the Administration wants more. Bartlett then asks the American People to punish the Republicans for all of the negative fallout for healthcare insurance.

  • ...

    That sounds like a reality conjured up by co-Presidents Bartles & Jaymes, to me.

    Gawd, I’m getting old.

  • Red Barchetta

    I’m only surprised that anyone is surprised. It was predictable, and predicted. Perhaps planned.

    Oh, and SarBox is an excellent case study in how it goes.

  • Red Barchetta

    Or some of the factoids concerning Medicare or SS in this:

    http://www.zerohedge.com/news/2014-02-11/22-facts-about-coming-us-demographic-shock-wave

    This isn’t political, just the facts, mam. Against the backdrop of this looming financing need I can’t fathom why yet another cost inefficient, budget busting government oriented program is being touted, or why every economically oriented public policy isn’t pro growth.

  • Jimbino

    If ever you were thinking of moving your company to Mexico, now is the time! And if ever you were thinking of moving yourself to Cuenca, Ecuador and renouncing your Amerikan citizenship, now is the time!

    We are apparently cursed by the dim prospect that commentary on the miseries of Obamacare will continue for more than three years. It would be a positive thing if Schuler and others would proffer an alternative to Obamacare, spelling out the details, so that we could all benefit from the ruminations. It’s not enough to wait for Republicans to save us; if we do, we’ll end up with insurance provider welfare, drug manufacture welfare, medical practitioner welfare, controls on the female body, punishment of single mothers and all the other miseries countenanced by the RC church and evangelicals.

    My own healthcare reform plan would:

    1. Uncouple health care from insurance altogether. The Amish have done it.

    2. Uncouple health care from employment altogether, eliminating tax-breaks for health insurance, especially those that aren’t enjoyed by cash-paying consumers of health care.

    3. Facilitate spending of healthcare dollars overseas, where treatment is cheaper and the doc and hospital network is world-wide.

    4. Force all healthcare providers to publish pricing for all procedures by ICD-10.

    5. Force all healthcare providers to treat all patients on a MFN basis, as do Amazon and Walmart.

    6. Eliminate discount pricing based on family status, or any other status, as do Amazon and Walmart.

    7. Remove barriers to entry into providing health care; encourage nurse practitioners to practice some medicine or, better yet, eliminate licensing and certification altogether, as Milton Friedman recommended.

  • TastyBits

    Obamacare is supposed to benefit the less well off at the expense of the well off, but it looks like the powerful win again. Everybody but the individual gets an exemption or delay.

    I am supposed to believe that this is the antidote to concentrated wealth. This is a big win for the little guy. The people with power have just gained an enormous amount of power, and things are going to turn out swell.

    Nobody wants to debate this today. Better to wait five or ten years, and let the reality get thrown down the memory hole. Then you can blame the Constitution and Capitalism.

    And for the record, Mao was not some deep thinker. He was was fucking killer. He wanted power, and he did not hesitate to kill anybody in order to obtain or maintain that power.

  • jan

    How many Obamacare customers have paid for their plans? IOW, how many have actually enrolled in Obamacare? For some reason the administration has not been wholly forthcoming about an exact figure, as it pontificates how good the program is now being implemented.

    In the meantime, there is yet another delay in the mandates — confusing in how it was constructed by the WH — and totally without consultation from any other branches of government. Doesn’t anyone find this disconcerting? Or, is this just an extension of the “new norm,” as everyone seems to call anything they can’t really explain or justify.

  • TastyBits

    It seems that Obamacare means what the President says it means. Does this end with President Obama? If not, does a Republican President get to make similar changes? Are there any provisions in the Obamacare bill that prohibit Republicans from carrying out the orders of the evil wealthy who hate the poor? If not, why?

    Was this due to being unqualified, incompetent, or both? So many questions. So few answers. Pathetic.

  • TastyBits

    @Drew

    Since nobody wants to play, here is a link I just ran across. It is off-topic, but I believe it is a point you try to make. He does it without golf references.

    Why Don’t Wages Fall During a Recession?: Q&A With Me Channeling Truman Bewley, Bryan Caplan

  • TastyBits

    Here is my proposed solution:

    Universal healthcare with public hospitals and clinics. Start a program where students loans can be repaid through service at public hospitals and clinics. This would include all types of work. No unions would be allowed. I would try for an amendment to ban all federal workers from unions as part of a deal.

    There may need to be an expansion of Medicaid until facilities get up and running. The private system would remain intact. Insurance benefits would be taxed as income.

    There are many holes to be filled, but this system limits the power to the system. The VA only has the power to screw over vets. The school system can only screw over the students. They may be bad, but they cannot cause wealth to be concentrated.

  • PD Shaw

    Tastybits, I am just trying to figure out how the thing works; I’ll think about the big questions when the thing stops moving.

  • TastyBits
  • Relevant: the number of freelancers is growing very rapidly.

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