E-Newsletter

Obamacare – Delay… Hmmmmm…

The Obama Administration recently announced that it would be delaying for one year the ‘employer mandate’ built into the health care reform law, also known as Obamacare.  The employer mandate requires businesses with 50 or more full-time employees (which, in the case of Obamacare, applies to employees working 30 or more hours each week) to provide health insurance coverage to employees, or face a penalty tax up to several thousand dollars per employee. 

The employer mandate has been one of Obamacare’s controversial provisions.  I have heard from numerous employers and managers across the Ninth District that this component of Obamacare has forced them to reduce hours, lay off employees, or lose sleep trying to figure out how to make their businesses work under this provision of the law.  Washington Post columnist Ezra Klein, generally thought of as a liberal, recently wrote, “It’s a bad bit of policy.  In fact, when it first emerged during the Senate’s negotiations, I called it ‘one of the worst ideas in recent memory.’”*

I agree with him on this. 

The Obama Administration delaying enforcement of the employer mandate is another admission that the law, as written, simply will not work. 

Among the parts of Obamacare not working:

CLASS, the law’s long-term care program, was determined to be financially unsustainable and has been suspended; 

In a Friday July 5 release of new regulations on Obamacare, the word “delay” appears 45 times according to Sarah Kliff of the Washington Post;**  

The Pre-Existing Condition Insurance Program (PCIP) was estimated to cover 375,000 people when the bill was enacted in 2010.  However, only roughly 100,000 individuals were actually enrolled before the Administration abruptly announced it closed new enrollments in early March because the program had already committed all of its $5 Billion in funding.  The fund was supposed to last until 2014.  Further, because of inaccurate projections, even those allowed in the program before it was closed now face greater out-of-pocket health care expenses.

Candidate Obama promised that health premium rates would decrease.  While campaigning in 2007, now-President Obama said "I have made a solemn pledge that I will sign a universal health care bill into law by the end of my first term as president that will cover every American and cut the cost of a typical family's premiums by up to $2,500 a year.”  However, the House Energy and Commerce Committee recently released a report indicating that, under Obamacare, premiums in the small group market in Virginia could increase by as much as 31 percent.  In Tennessee, these premiums could increase by as much as 35 percent.  Some small group markets and individual plans are projected to have rate increases even higher.

The employer mandate is particularly unpopular.  So the Administration has delayed that portion of Obamacare until after the 2014 elections.  Hmmmmm... A political decision for a real-world problem?  Say it ain’t so!

Even though the Administration has delayed the employer mandate, the individual mandate is still in place, and it requires each American to purchase health insurance or pay a penalty tax (the Obama Administration and their allies in Congress called it a penalty fee initially, but it was ruled by the Supreme Court to be a tax).  However, these two mandates are linked together.  A key component of Obamacare was that employers would report to the federal government who they are providing insurance coverage to and how much of that coverage they were paying for.  This data would be utilized to determine who qualifies for a federal tax credit to subsidize the purchase of private insurance. 

With the employer mandate being delayed, what happens to the individual mandate?  As Washington and Lee University, School of Law professor Timothy Jost said to the Reuters news agency, “the exchanges and the IRS will not be able to verify whether someone's coverage is unaffordable.” ***  Therefore, individuals will self-report their eligibility for subsidies to the federal government.  Essentially the health care law will be operating on an honor system in which individuals could miscalculate or fudge their eligibility for subsidies, which has the potential to cost the government millions of dollars.

Senator Max Baucus, one of the law’s main architects, was right when he described Obamacare as “a huge train wreck coming down.”  The Administration’s decision to delay the employer mandate is just another sign that the law was drafted very poorly and was not built carefully enough to work as President Obama promised.  It is past time that we dismantle Obamacare, and replace it with solutions that ensure access to affordable, high quality health care for all Americans. 

As always, if you have questions, concerns, or comments, feel free to call my Abingdon office at 276-525-1405 or my Christiansburg office at 540-381-5671.  To reach my office by email, please visit my website at www.morgangriffith.house.gov.

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* http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/02/obamacares-employer-mandate-shouldnt-be-delayed-it-should-be-repealed/

** http://www.washingtonpost.com/blogs/wonkblog/wp/2013/07/08/its-not-just-the-employer-mandate-three-obamacare-delays-you-havent-heard-about/

*** http://www.reuters.com/article/2013/07/05/us-usa-healthcare-exchanges-idUSBRE96402X20130705