Employer mandate madness

I’ve got a new post at The Week on the burgeoning case for repealing Obamacare’s employer mandate:

What Burwell and Sebelius failed to acknowledge is that the employer mandate is extraneous to ObamaCare’s insurance market reforms, while the individual mandate is essential to ensure the system doesn’t collapse under the weight of new enrollees who are sicker and older. The administration’s dirty little secret, in other words, is that the employer mandate just isn’t that important.

And opponents of the mandate got some new ammunition last week, in the form of a paper from researchers at the Urban Institute. The left-leaning policy organization said that the employer mandate shouldn’t merely be delayed — it should be killed altogether.

Read the rest here.

Two additional points piggy-backing off this piece:

1. Even if we wanted to retain a health insurance system, it’s not necessarily the case that the employer mandate will effectively encourage employers to provide insurance. In fact, the opposite might turn out to be true. Employers might treat the mandate penalty as a fee rather than a fine. Moral philosopher Michael Sandel illustrates the distinction between fines and fees through a daycare center that wanted to discourage parents from picking up their children late. The center began charging parents a penalty if they were late for pickup. Surprisingly, the daycare center saw late pickups actually increase. This is because the parents treated the penalty as if it were a fee—they could now pay for the right to pick up their children late.

If employers likewise treat the mandate penalty as a way to pay their fair share in order to avoid offering health insurance, then we might see more firms grow comfortable doing so—particularly if health insurance costs outpace the value of the penalty.

2. Even though the employer mandate is bad policy, repeal ultimately depends on (gasp) congressional action. Our legislative system, however, is severely broken around the issue of health care. Since 2009, Republicans have been committed to repealing Obamacare in totality, refusing to do anything that might improve the law for fear of weakening their case. Democrats steadfastly reject repeal. This all-or-nothing political dynamic has frozen the state of our health care regulatory regime, leaving administrative agencies to go it alone in tweaking the law within the bounds of reasonable statutory interpretation.

The Obama administration has had to rely on legally questionable administrative delays to avoid implementing the employer mandate. If the volatile politics around health care eventually subside (perhaps after the 2014 midterms), one would hope that the parties could build a legislative solution to the employer mandate, rather than defaulting to an executive one.

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