Obamacare’s employer mandate delayed:

What will this mean for reform? Should the mandate be repealed?

  • By
  • healthinsurance.org Contributor
  • July 8, 2013

EDITOR’S NOTE: Unfazed by the delay, Cumberland Gulf Group has announced that it is moving forward with its plan to EXPAND employee hours and offer health insurance to more employees.

“When the news came out yesterday about this delay, we were like, ‘Okay, so what does that mean?’ And the answer was absolutely nothing. We’re moving forward,” said John McMahon, Cumberland’s chief human resources officer.

The company owns 600 Cumberland Farms convenience stores and more than 2,000 Gulf Oil gas stations.

Conservative Forbes columnist Avik Roy is tickled pink. The administration has announced that the employer mandate requiring businesses with more than 50 employees to offer their workers health benefits won’t kick in until January 2015.

Roy sees the postponement as proof that Obamacare is unravelling, and that the mandate should be overturned. Moreover, he crows, progressive blogger Ezra Klein agrees with him. (I fear Roy truly believes that Klein has become his new best friend.)

Much ado about very little

As usual the doomsters are ignoring the facts. The delay will affect only a fraction of U.S. employers and even fewer employees.

Remember, the mandate only applies to companies with more than 50 workers. Of the 5.7 million American businesses only 210,000 – or roughly 4 percent of all U.S. firms – fall into that category. And 95 percent of them now offer insurance.

Few employees will be hurt by the postponement. If some bosses don’t offer benefits in 2014, their employees can go to the individual exchanges where many, if not most, will be eligible for generous tax credits. (If workers qualify, then, and only then will their employers have to pay penalties to help cover the subsidies.)

This is why former White House health policy advisor Zeke Emanuel says: “I actually don’t think this delay is that big a deal.”

To judge the success of Obamacare, don’t overreact to day-by-day headlines

Emanuel also counsels taking a long view of healthcare reform: “We need to look for 2020 rather than moment to moment for changes in the system.”

Reforming U.S. healthcare is an enormous undertaking. It will be a process, not an event, and inevitably, along the way, we will hit speed bumps. Each time that happens, Obamacare’s opponents will jump up and down: “The End Is Near! Obamacare is dead!” The rest of us should ignore them, take the long view, and forge ahead.

What impact will the delay have on the mid-term elections?

Last week, Washington Post conservative columnist Jennifer Rubins announced that “the Obama administration has undermined its sole claim to greatness and delivered a blow to Democrats on the ballot in 2014.” In truth, this is far from a major setback for Democrats.

Even FOX News acknowledges that “President Obama’s decision to push back key provisions of his signature healthcare law amid growing concerns it isn’t ready for prime time could take a key issue away from Republicans in next year’s midterm elections … This likely undercuts Republican plans to make ObamaCare the centerpiece of their midterm election strategy.”

Repeal the employer mandate?

“Obamacare’s Employer Mandate Should Not Be Delayed, It Should Be Repealed” – Ezra Klein

Klein fears that the mandate will hurt low-income Americans. Employers will be reluctant to hire employees who would qualify for subsidies in the individual exchanges, he reasons, because if workers receive help from the government, employers would have to pay penalties.

Klein quotes the Center for Budget Policy and Priorities (CBPP): “Low-income women with children in one-earner families would be particularly disadvantaged,” because they would be most likely to go to the exchange and receive a tax credit.

I admire both Klein’s Wonkblog and the CBPP, and agree with much of what they have written about reform. But I don’t for a minute believe that employers will let the mandate determine who they hire. Too many other factors are involved – including a worker’s experience, how much an employer would have to pay her, and whether he likes and trusts her.

More importantly, the CBPP’s argument assumes that employers don’t want to offer insurance. To the contrary, as Klein himself has acknowledged, employers offer health benefits, not as a favor to employees, but because they know that “if you don’t offer insurance and your competitors do, you’ll lose out on the most talented workers.”

Research shows that health benefits improve productivity and customer service while reducing absenteeism. This explains why 95% of employers with more than 50 workers provide benefits.

Wal-Mart

Granted, some retail and restaurant chains may try cutting hours and replacing full-time workers with part-timers. Wal-Mart is doing just that. But as Forbes has reported: Wal-Mart now is experiencing “complaints about understaffed stores with empty shelves and inventory piling up in warehouses and back rooms.”

By contrast, Target, one of Wal-Mart’s chief competitors, has said that it plans to continue to insure part-time workers – even though the ACA does not require that it do so. Some companies will use the ACA to strengthen their companies. Recently the Cumberland Farms convenience-store chain announced that it will make an additional 1,500 employees eligible for employer-sponsored health insurance by classifying them as full-timers before the ACA kicks in January 1.

“We could have pushed everybody [now working] under 40 hours below 30,” said Ari Haseotes, the company’s COO. Instead, “we’re making a proactive effort here to go above and beyond, and clearly differentiate ourselves in the job market as a place to come to work.”

Cumberland Farms will have little reason to avoid hiring those single mothers. Very likely, they will prove to be extremely loyal, hard-working employees.

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