New Report: Employer Mandate is Ineffective

May 14, 2014

pic-health-cost-blueA new analysis published by the Urban Institute and sponsored by the Robert Wood Johnson Foundation makes a compelling case that Obamacare’s mandate that employers provide health insurance for workers adds a great deal of complexity, distorts the labor market, and does very little to increase the availability of health insurance coverage.

When the Patient Protection and Affordable Care Act (PPACA)—Obamacare—was enacted, it contained a provision requiring all companies with 50 or more workers to provide health insurance for their employees. Such a requirement sounds simple, but it has led to complex calculations to determine the number of employees, how to determine employee eligibility, and the level of coverage or payment necessary to achieve “affordable coverage.” NSBA has predicted a quagmire from the beginning, and the Administration has responded by temporarily modifying and delaying the effective date of the mandate.

This new analysis makes clear that the underlying problems with the mandate have little to do with timing and “start-up” problems. The analysis—by Urban Institute fellows and researchers—walks through much of the complexity of the law for employers, explains the resulting labor market distortions, and clearly makes the case that these employers will continue to offer coverage even without a mandate. However, the authors point out that the penalties employers will pay associated with the mandate are essentially treated as tax revenue. An elimination of the employer mandate, while not consequentially reducing coverage, would mean the need for spending reductions, other revenue increases, or an increase in the deficit.

Please click here to read the full report.