Published July 3, 2013
The Obama administration must have been hearing some awfully threatening noises from the business community lately, because its unilateral delay of Obamacare’s employer mandate, from 2014 to 2015, is otherwise very difficult to explain. The delay is an embarrassing move for the White House and will create some serious new headaches for Obamacare’s defenders.
The delay creates new opportunities for opponents of the law. Like so much of Obamacare, the employer mandate is terrible policy, and putting it off for a year makes it more likely that it can be put off permanently. More important, however, this move makes the law as a whole harder to defend, and makes its champions in Congress more vulnerable.
For starters, the delay confirms precisely what the critics have been saying all along: That Obamacare is a huge burden on the economy that will reduce employment and stifle wages. By delaying enforcement of the mandate, and citing complaints from employers as the reason, the Obama administration is essentially conceding this point. How do Democrats defend the law now that the administration has admitted it has the potential to harm business vitality and job growth?
And if the law has that potential now, why wouldn’t it have it in a year? Next year, with the mid-term election approaching, how would Democrats resist pushing the employer mandate back again, to 2016, or 2017? A one-year delay will also be interpreted by the business community as the first step in the ultimate repeal of the mandate, and such an expectation could easily become a self-fulfilling prophecy.
At the same time, the law without the mandate becomes even harder to justify. It will, for one thing, be more expensive. In assessing Obamacare’s cost before it was enacted, the Congressional Budget Office assumed the employer mandate reduced its cost, because although employer-provided insurance is tax-preferred, it still costs the federal government less than Obamacare’s exchange subsidies.
But above all, the delay leaves Obamacare with an individual mandate but without an employer mandate, which could well prove politically untenable for the Democrats.
The administration’s announcement made no mention of changing the enforcement schedule for the “personal responsibility requirement.” So, with the delay, employers are under no obligation to offer insurance to workers but the IRS can still impose a tax on workers who don’t have qualified insurance in 2014. The Obama administration therefore wants to let big businesses off of the hook but not hard-pressed working families. How do Democrats defend that position? And how do they vote against a bill to delay the individual mandate? This is a huge opening for Republicans, and it would be political malpractice not to pursue it. The GOP can now quite credibly push for a delay of the entire law for a year, or at the very least attach a delay of the individual mandate to a statutory delay of the employer requirements.
The administration will argue that workers can still get coverage in the health exchanges if their employers don’t offer them coverage, but the exchanges are behind schedule and the premiums that dumped workers would find in them will generally be far higher than those typically charged by employer-sponsored plans, and will not be tax-preferred.
The Obama administration is hoping that this delay will get them past the 2014 mid-term election, much like the delay tactics they employed to get past 2012. And it is conceivable that proceeding with the mandate would have caused them even more problems than this delay will yield. But the delay won’t be without significant costs for the White House. They have now created real and present risks for the viability of the entire law.
-James C. Capretta is a senior fellow at the Ethics and Public Policy Center.