Wednesday, January 17, 2018

Overcoming the real hurdles in Obamacare


Maybe it was the too-cute-by-half way the administration let slip the news about delaying the requirement that employers provide health care — policymaking by early evening blog post. Any announcement so deliberately low-key had to signal bad news.

Maybe it was wishful thinking on the part of the health care law's legions of enemies. "This announcement means even the Obama administration knows the 'train wreck' will only get worse," chirped House Speaker John Boehner, R-Ohio, declaring "a clear acknowledgment that the law is unworkable."

Whatever the reason, reports of the impending death of Obamacare have been greatly exaggerated. Indeed, reports that postponing the mandate demonstrate that the law is too unwieldy to work have been greatly exaggerated.

Put another way, if you are a fan of the Affordable Care Act and worry about its implementation, or an enemy salivating at the prospect of its implosion, you should focus on other potential problem areas. Among them:

• Whether the insurance exchanges will be up and running by Oct. 1 in a way that's accessible and comprehensible to consumers.

• Whether there will be enough sign-ups by the "young invincibles," who may believe they are impervious to the need for health insurance but whose premium dollars are essential to keeping overall costs low.

• Whether — and this is perhaps most fundamental — it is possible to implement a change this sweeping and complex in the face of massive political resistance by states whose Republican governors decline to participate and by Republicans in Congress unwilling to consider legislative tweaks or to provide adequate funding for implementation.

In other words, of all the headaches facing Obamacare, the employer mandate isn't close to the most throbbing.

The essential mandate is the requirement that individuals obtain insurance. The parallel mandate that employers with more than 50 workers offer insurance was something of an add-on, a belt on top of suspenders. Without it, the law still works.

The reason is that most employers covered by the requirement — more than 94 percent, according to the Kaiser Family Foundation — already offer insurance. Their incentives to do so — to attract and retain workers, to take advantage of the tax-free nature of compensation in the form of health care benefits rather than salary — will remain, regardless of the mandate. Most employers will continue to play, whether or not they have to pay.

Some critics have argued that the employer penalties, $2,000 to $3,000 per worker, perversely incentivize employers to drop coverage because paying the fine would be less costly than providing insurance and because their employees would be able to purchase coverage on exchanges. Yet in Massachusetts, where the employer penalties were far lower than those in federal law, the share of employers offering insurance rose after the mandate took effect.

At the same time, the precise structure of the federal employer mandate is ungainly — or, less charitably, dumb. It kicks in for employees working more than 30 hours a week. Employers may be tempted to game the system — and hurt workers — simply by reducing hours, converting full-time employees to part-timers.

The better approach, as my Washington Post colleague Ezra Klein has argued, was in the House version of health care reform, which calculated employer compliance based on the percentage of payroll spent on health care.

So what will be the impact of the delay? There is, granted, a certain irony in the administration freeing employers from the responsibility to provide coverage while individuals continue to face a penalty if they do not obtain it.

Still, as noted earlier, employers that offer coverage now aren't about to drop it because of this change. As for the relatively small number of employers that would have added coverage in response to the mandate, their workers aren't out in the cold. They will be able to buy insurance on the exchanges and, because most are low- to moderate-income, will be eligible for federal subsidies to pay the cost.

Similarly, workers whose employer-sponsored coverage is unaffordable (because it exceeds 9.5 percent of incomes) or fails to meet minimum standards are also eligible for subsidized insurance on the exchanges.

In short, the federal government loses income from the expected penalty payments — $10 billion, the Congressional Budget Office estimates. The complications that induced the administration to postpone the employer mandate (how to count workers' hours or implement reporting requirements) are just that — complications, not insurmountable obstacles.

Expanded access to insurance — the fundamental goal of health care reform — remains intact.

© 2013 Washington Post Writers Group

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