A bulwark of big government programs and supporter of Obamacare is calling for discarding the employer mandate fearing problems it will cause I the labor market.
President Barack Obama. (Getty Images)
“The requirement’s implications for coverage are small and yet the negative labor market effects of keeping it in place could harm some low-wage workers,” said a report by the Urban Institute, a liberal advocacy group.
The Obama administration has already delayed the employer mandate, which is a key part of the Affordable Care Act, better known as Obamacare. The mandate states that employers with 50 or more employees must provide insurance or face penalties.
The report states that in the short term, dumping the employer would “not reduce insurance coverage significantly;” that it would reduce projected federal revenue from penalties by about $46 billion; but states the cost of keeping the mandate could affect hiring decisions and wages.
Moreover, the liberal group does not suggest that President Barack Obama could do this unilaterally.
“Alternative sources of revenue would have to be found to compensate for the federal loss of penalties,” the report states. “Both the elimination of the mandate and creating a new source of revenue to replace it will require legislation.”
The critique’s source carries pedigree with the left. The Urban Institute began in 1968 as a group of government officials tasked by President Lyndon B. Johnson to monitor the progress of the Great Society in large cities. What began as Johnson’s blue ribbon commission became a private nonprofit liberal group that has advocated universal health care for decades.
“The most frequent claim is that employers will move to more of a part-time workforce,” the report sates. “For example, several large firms recently announced that they would be reducing hours for part-time workers to less than 30 (Land’s End, Regal Entertainment, Wendy’s, and SeaWorld).”
The report states that such anecdotal occurrences have hurt the perception, but said the actual toll might be unclear.
“However, even if the ACA’s labor market effects are modest, there will undoubtedly be some distortions created,” the report states. “Creating arbitrary thresholds (e.g., potential penalties for firms of 50 or more workers not providing coverage for employees typically working 30 or more hours per week) for financial requirements will change the employment decisions in some firms, and at least some workers will be adversely affected by them.”
Further, the Urban Institute goes on to say: “Most employers would not drop coverage if the penalties were eliminated. About two thirds of American workers now have offers of employer coverage when there is no mandate to do so.”
“On balance, the individual mandate and tax benefits will keep most employers offering coverage regardless of the penalty,” the report continues. “And those that drop because of the ACA will have done so because of other provisions in the law (e.g., the Medicaid expansion and income-related subsidies). Few employers will decide to no longer offer
coverage simply because penalties are eliminated.”
—
