The Obama administration has made what many consider a political move by extending the deadline for compliance with the employer mandate for smaller large employers (50-99). The Kaiser Foundation has rounded up several news article that have covered the story.
Previous blogs (July 4, 12, August 20, 2013) discussed how the original delay in the employer mandate really didn’t matter much in terms of getting Americans insured. That argument is still relevant here. It’s the Individual Mandate that matters…even if some may prefer the idea of having employers be more responsible for offering health insurance as a benefit to their employees.
As we may remember the original employer mandate was to apply Jan 1, 2014 for all businesses with over 50 employees. These businesses were going to be required to offer insurance to all of their full time employees (defined as 30 hrs week or more).
The other requirements were that the insurance must be
- affordable, defined as premiums that cost no more to the worker than 9.5% of annual household income AND
- adequate, an insurance term that categorizes the type of shared costs of the plan. To be adequate, the plans must overall pay for about 60% of the annual costs of care on average for their workers. These plans in the Marketplace are categorized as Bronze plans.
The first delay was giving those businesses until Jan 1, 2015. This extended that delay for the smallest of those larger businesses til Jan 1, 2016.
While trying to quell one political concern (having insurance policies cancelled or changed around November election time 2014) it raises a new one: why do businesses keep getting a delay in their mandate but not individuals? The answer to that may have to do more with the economics of how ACA is designed rather than political expediency or out-right unfairness. (And this was addressed in that Aug 20 blog.)
The goal of the ACA was to get as many people insured, as fully as possible. Even if employers aren’t mandated to provide insurance to their workers there are now alternatives with relatively affordable plans: the Marketplaces.
The plans being offered in the Marketplaces are both “affordable” and at least “adequate” as defined above. That is, they are much better than many of the plans that people in the private market, and even those in employer-sponsored plans, were holding. While some have complained that the premiums of the policies in the Marketplaces are too high, there are tax credits to help share the cost of those premiums for individuals and families under 400% of poverty (roughly $94,200 for a family of four). BUT those Marketplace plans are really very affordable for people who had previously been locked out of insurance all together, usually because they had pre-existing conditions.
So, even though many may be bothered by not requiring employers to offer insurance, others will see that as long as there are policies that cannot turn away seekers, and policies that are relatively affordable, then ACA can continue to march toward fuller insurance for all Americans.
It could also be that one of the ACA best assets is that it frees Americans from relying on the workplace for insurance. That is, as we delink insurance from the workplace it will free up a lot more opportunities for people to work where and for whom they choose.(see blog dated Nov 12.) The Marketplaces offer the group rated premiums that previously were only available to the largest of businesses. Now individuals can get those policies on their own. In fact, this latter issue is one that caused a stir last week. A CBO report was issued that said 2 million people would leave the workforce. Republicans claimed this was because of employers laying off workers. The CBO actually attributed most of this chance to choices people would be making to leave jobs they no longer wanted. Apparently many are working solely to maintain health insurance coverage which they would not be able to purchase elsewhere (or be eligible for Medicaid in states where eligibility criteria was expanding to include all who were under 138% of the poverty line).
As a reminder, businesses with less than 50 employees were NOT mandated to offer insurance and those under 25 employees were offered financial tax incentives if they were to choose to do so.