Repealing ObamaCare employer mandate could be costly to government

Two research organizations that came out with reports May 9 in regards to the ramifications of repealing the Affordable Care Act (ACA) say that it may cost the U.S. government politically and financially over the long haul.

According to a news report by McClatchy Washington Bureau, new research by the Urban Institute states that repealing the ACAs “employer mandate” would eliminate labor market distortions, cut opposition to the health law and leave only 200,000 more Americans without health insurance.

The employer mandate requires large businesses with 100 or more workers to provide affordable health insurance for full-time workers or face a penalty of $2,000 per employee beginning in 2015. New rules allow these employers to cover only 70 percent of eligible employees in 2015 and 95 percent in 2016 and beyond. Employers with 50 to 99 workers have until 2016 to comply with the mandate or face similar penalties.

The ACA originally called for the penalties to begin in 2014, but the Obama administration delayed their enforcement after complaints from business groups.

The employer mandate has been controversial since the health law was passed in 2010. Critics claim the provision gives businesses a financial incentive to keep their employees on part-time schedules and their workforce below the levels that mandate coverage. That hurts job creation and employee pay. The GOP also claims that delays in implementing the employer mandate amount to corporate favoritism.

In another report put out by the Urban Institute’s Health Policy Center, estimated that most employers wouldn’t drop coverage if the penalties were eliminated, in part, because of the tax benefits. They estimate that 500,000 would lose employer coverage after the mandate is repealed. That’s a decline of just 0.3 percent.

The institute stated that repealing the mandate would cost the government nearly $4 billion in employer penalties in 2016. The repeal would also cause more people to seek Medicaid coverage and tax credits to purchase individual marketplace coverage. That would cost the government an extra $4.3 billion a year or about $46 billion from 2014 to 2023, researchers estimate.

Since the employer penalties help pay for the tax credits that help people purchase marketplace coverage, Congress would have to come up with a new source of revenue – about $130 billion over ten years.