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Issues in Health Reform

Category: employer mandate

Smaller large employers (50-99) are now being given until Jan 2016 to come into compliance with ACA employer mandate

Posted on by rriporte

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.

 

 

Delay in employer mandate may not impact number of people insured nor costs

Posted on by rriporte

NEW STUDY by Rand verifies basic findings from Urban Institute report original July 18 posting as below, THOUGH it does point to a significant loss of federal income due to expected penalties not being collected.

“In July 2013, the Obama administration announced a one-year delay in enforcement of the Affordable Care Act’s (ACA) penalty on large employers that do not offer affordable health insurance coverage. To help policymakers understand the implications of this decision, RAND analysts employed the COMPARE microsimulation model to gauge the impact of the one-year delay of the so-called employer mandate. They found that the delay will not have a large impact on insurance coverage: Because relatively few firms and employees are affected, only 300,000 fewer people, or 0.2% of the population, will have access to insurance from their employer, and nearly all of these will get insurance from another source. However, a one-year delay in implementation of the mandate will result in $11 billion dollars less in federal inflows from employer penalties for that year. A full repeal of the employer mandate would cause revenue to fall by $149 billion over the next ten years (10% of the ACA’s spending offsets), providing substantially less money to pay for other components of the law. The bottom line: The one-year delay in the employer mandate will have relatively few consequences, primarily resulting in a relatively small one-year drop in revenue; however, a complete elimination of the mandate would have a large cumulative net cost, potentially removing a nontrivial revenue source that in turn funds the coverage provisions in the ACA.”

A report issued by the Urban Institute states that “The one-year delay in ObamaCare’s employer mandate won’t have much effect on the law’s costs nor the number of people it covers.”  The report summarizes though that a change in the individual mandate will have a significant impact.  Having a parallel delay in the implementation of the individual mandate is something currently being considered by Congressional Republications, though like their attempts at full repeal of the law, it is not destined for any traction.

The analysis in the report predicts a decline from 19% to only 15% without the individual mandate, down to 10% with the individual mandate.  Without the employer mandate this model predicts the number of uninsured to go to 10.2% uninsured rather than 10.1% with the mandate. That is, the difference with or without the employer mandate is pretty insignificant in terms of impacting the numbers of newly insured.

 

Is it legal for the Obama administration to change the date of implementation of the employer mandate?

Posted on by rriporte

This editorial by a lawyer in The Washington Post suggests that the administration does not have the authority to say that the date for the employer mandate be delayed.  It will be interesting to watch this particular part of the debate play out.  These has been lots of support from businesses for this delay, perhaps enough that this kind of tweaking of this massive law could make it through Congress to the President’s desk for his signature.  It appears that that might be legally necessary.

Curious that there has not been such concern over the CLASS Act, Title VIII of the Act, “Community Living Assistance Services and Support.” This is basically a bill that instituted a federally run long term care insurance program with no federal dollars. It was put on the back burner because a Department of Health and Human Services analysis revealed there would be many problems with implementation.  Most likely, it will never be implemented. I’m not sure why it was allowed to be mothballed if the administration doesn’t have authority.  The nuances here are clearly beyond my expertise.