Yesterday the Obama administration announced that it would not be implementing the employer mandate portion of the Affordable Care Act until after the 2014 elections. But back in 2009, the employer mandate was a key to selling the still developing bill to the public.
On June 15, 2009 the CBO issued an estimate of Sen. Ted Kennedy's Affordable Health Choices Act. The results were not good. In fact, Ezra Klein variously called the CBO estimate "fairly devestating" and also labeled it a "catastrophe" and a "bum deal." According to the CBO this early draft of what became Obamacare would cost $1 trilliion dollars and would only cover 16 million additional people by 2019. Very little bang for the buck.
However, proponents of the bill were quick to point out that the version scored by the CBO had a weak individual mandate and completely lacked an employer mandate. Two weeks later, after the bill's authors submitted a new version for scoring, CBO announced better numbers. The cost dropped to around $600 billion and the number of people covered went up to 20 million. The difference maker, according to Ezra Klein, was the inclusion of an employer mandate. Here I'll quote his reaction at length:
The June 15th proposal didn't include an employer mandate. And without one, the news was grim: Employers would drop coverage for 15 million employees and send them to the Health Insurance Exchange where they would need government subsidies to afford health insurance. That meant costs exploded and coverage contracted. Health reform looked like a bum deal.
But oh, what a difference a mandate makes...The June 15 report estimated that 15 million Americans would lose their employer-based coverage under HELP's bill. Today's report estimates that a mere 150,000 will lose their coverage. That's nothing. And it means that a lot more Americans end up insured and the government spends a lot less in subsidies.
I'll have much more on other provisions of the bill later. But the overarching lesson of these CBO reports is simple: You can't do health-care reform -- at least not this kind of health-care reform -- without an employer mandate.
To be fair, Klein was not a fan of a version of the employer mandate that was proposed later. But the point is that without the employer mandate at all, the law was behaved very differently. As Klein put it "You can't do health-care reform -- at least not this kind of health-care reform -- without an employer mandate." What you can do is other types of health care reform, e.g. a move away from the employer based market entirely.
Most of the shifting around that results from not having an employer mandate happens at the beginning of the program. Here's the CBO estimate for that early bill without an employer mandate. If you scroll to the final page you'll see that over two years roughly 14 million people get dumped from employer coverage and 21 million extra people wind up on the exchanges. From that point onward the numbers are relatively steady.
Of course the employer mandate hasn't been repealed, only delayed. Nevertheless, as Avik Roy at Forbes points out, this could turn out to be a key turning point in the decline of employer provided insurance (something he apparently supports):
If you like Obamacare, and you want it to work, you don’t need the employer mandate. Democrats put the employer mandate in Obamacare because the President was worried that, without a mandate, employers would dump coverage, violating his oft-repeated promise that “if you like your plan, you can keep it.” Before Mitt Romney signed Massachusetts’ health-reform bill into law, he vetoed that state’s employer mandate. The heavily Democratic legislature overrode his veto.
Even if the Obama administration’s delay lasts for only one year, that delay will give firms time to restructure their businesses to avoid offering costly coverage, leading to an expansion of the individual insurance market and a shrinkage of the employer-sponsored market. Remember that the administration is not delaying the individual mandate, which requires most Americans to buy health coverage or face a fine.
In other words, even more people will need to forget the President's central promise about Obamacare. CBO said earlier this year that 7 million Americans will lose their employer offered health insurance. With the delay in implementation of the employer mandate, we can expect that number to climb higher.
The administration says they are delaying the mandate to be responsive to businesses. Conservatives have noted that this also takes an unpopular issue off the table for the 2012 election. Given how the 2010 midterms went, that could be important for Democrats.
But you also have to wonder if the President is playing a long game here. Recall that he and various Democrats (including Ezra Klein) have admitted the goal of health reform was to shift the country to a single player plan over time. The exchanges (with the inclusion of a public plan) were a way to get there without having to sell the country on single-payer up front. But as Avik Roy notes above, Obamacare work without the employer mandate. In fact, if your goal is to shift people onto the exchanges, it works even better. Then all that's missing is a public option. Maybe all of this sounds far out but listen to the President talk about this issue. This move could also be part of a larger strategy:
Reported by Breitbart 10 hours ago.
On June 15, 2009 the CBO issued an estimate of Sen. Ted Kennedy's Affordable Health Choices Act. The results were not good. In fact, Ezra Klein variously called the CBO estimate "fairly devestating" and also labeled it a "catastrophe" and a "bum deal." According to the CBO this early draft of what became Obamacare would cost $1 trilliion dollars and would only cover 16 million additional people by 2019. Very little bang for the buck.
However, proponents of the bill were quick to point out that the version scored by the CBO had a weak individual mandate and completely lacked an employer mandate. Two weeks later, after the bill's authors submitted a new version for scoring, CBO announced better numbers. The cost dropped to around $600 billion and the number of people covered went up to 20 million. The difference maker, according to Ezra Klein, was the inclusion of an employer mandate. Here I'll quote his reaction at length:
The June 15th proposal didn't include an employer mandate. And without one, the news was grim: Employers would drop coverage for 15 million employees and send them to the Health Insurance Exchange where they would need government subsidies to afford health insurance. That meant costs exploded and coverage contracted. Health reform looked like a bum deal.
But oh, what a difference a mandate makes...The June 15 report estimated that 15 million Americans would lose their employer-based coverage under HELP's bill. Today's report estimates that a mere 150,000 will lose their coverage. That's nothing. And it means that a lot more Americans end up insured and the government spends a lot less in subsidies.
I'll have much more on other provisions of the bill later. But the overarching lesson of these CBO reports is simple: You can't do health-care reform -- at least not this kind of health-care reform -- without an employer mandate.
To be fair, Klein was not a fan of a version of the employer mandate that was proposed later. But the point is that without the employer mandate at all, the law was behaved very differently. As Klein put it "You can't do health-care reform -- at least not this kind of health-care reform -- without an employer mandate." What you can do is other types of health care reform, e.g. a move away from the employer based market entirely.
Most of the shifting around that results from not having an employer mandate happens at the beginning of the program. Here's the CBO estimate for that early bill without an employer mandate. If you scroll to the final page you'll see that over two years roughly 14 million people get dumped from employer coverage and 21 million extra people wind up on the exchanges. From that point onward the numbers are relatively steady.
Of course the employer mandate hasn't been repealed, only delayed. Nevertheless, as Avik Roy at Forbes points out, this could turn out to be a key turning point in the decline of employer provided insurance (something he apparently supports):
If you like Obamacare, and you want it to work, you don’t need the employer mandate. Democrats put the employer mandate in Obamacare because the President was worried that, without a mandate, employers would dump coverage, violating his oft-repeated promise that “if you like your plan, you can keep it.” Before Mitt Romney signed Massachusetts’ health-reform bill into law, he vetoed that state’s employer mandate. The heavily Democratic legislature overrode his veto.
Even if the Obama administration’s delay lasts for only one year, that delay will give firms time to restructure their businesses to avoid offering costly coverage, leading to an expansion of the individual insurance market and a shrinkage of the employer-sponsored market. Remember that the administration is not delaying the individual mandate, which requires most Americans to buy health coverage or face a fine.
In other words, even more people will need to forget the President's central promise about Obamacare. CBO said earlier this year that 7 million Americans will lose their employer offered health insurance. With the delay in implementation of the employer mandate, we can expect that number to climb higher.
The administration says they are delaying the mandate to be responsive to businesses. Conservatives have noted that this also takes an unpopular issue off the table for the 2012 election. Given how the 2010 midterms went, that could be important for Democrats.
But you also have to wonder if the President is playing a long game here. Recall that he and various Democrats (including Ezra Klein) have admitted the goal of health reform was to shift the country to a single player plan over time. The exchanges (with the inclusion of a public plan) were a way to get there without having to sell the country on single-payer up front. But as Avik Roy notes above, Obamacare work without the employer mandate. In fact, if your goal is to shift people onto the exchanges, it works even better. Then all that's missing is a public option. Maybe all of this sounds far out but listen to the President talk about this issue. This move could also be part of a larger strategy:
Reported by Breitbart 10 hours ago.