This week the House of Representatives will vote, almost precisely along party lines, to postpone Obamacare’s individual mandate. Like the 37 earlier votes to repeal the entire health care law, this bill will then move to the Senate, never to be heard from again. This, despite the fact that by a two-to-one margin (56 percent to 26 percent, according to Rasmussen) voters want to delay implementation of the individual mandate.
Now that the Obama administration has unilaterally decided to postpone the law’s employer mandate, workers may now face a situation where they will be legally required to purchase their own insurance or pay a penalty because their employers take advantage of the delay and don’t provide coverage.
It’s not just workers whose employers don’t currently provide coverage who may be affected. Many employers, especially small businesses, may look at rising insurance costs and decide to stop providing coverage. Even before the administration delayed the employer mandate, the Congressional Budget Office estimated that as many as 11 million workers could be dumped by employers who choose to pay the penalty rather than the cost of insurance. Others’ estimates, such as one from the American Action Forum, suggested that number could be as high as 35 million. With no penalty at all, at least for a year, we can expect even more employers to decide it makes sense to drop coverage.
That hardly seems fair, especially given how expensive that insurance is likely to be. A study by the benefits-consulting firm Milliman found that premiums in the individual market — where those uninsured workers will have to shop — could increase by as much as 50 percent. The young and healthy could face especially large premium hikes, with the Wall Street Journal reporting that they “could see insurance rates double or even triple when they look for individual coverage under the federal health law later this year.”
Of course, if they purchase insurance through the exchanges, subsidies are supposed to offset at least part of this increased cost (shifting the cost onto the backs of taxpayers). This, however, assumes that the exchanges will be fully operational before the mandate kicks in, something which the Governmental Accounting Office warns is by no means guaranteed. In addition, the administration’s decision to waive the reporting requirements associated with the employer mandate means that government won’t have the data necessary to determine who is eligible for a subsidy. As a result, workers could be on the hook for the entire cost of the insurance they are being forced to buy.
Not to worry though: Workers could always lie. The administration has announced that it will simply take applicants’ word on questions about their eligibility for subsidies, without any attempt to confirm that their employers had not offered affordable coverage. This will be true only on the state-run exchanges, but even federally run exchanges will check only a random sample of applicants. What could possibly go wrong with that?
Workers forced onto the exchanges will also have very little choice of insurance plans. Already, major insurers have chosen not to participate in many exchanges. For example, in California, Aetna, Cigna, and UnitedHealth have chosen not to participate in the exchange next year. Moreover, not a single plan available on California’s exchange offers health-savings accounts. In 36 of Mississippi’s 82 counties, among them some of the poorest counties in the state, there are currently no insurers offering plans through the exchange. Other states hardly fare better. Individuals purchasing insurance through the exchange in North Carolina will have only three options. People in Maine will be stuck with a virtual monopoly: They can choose between Anthem Blue Cross Blue Shield, the state’s largest insurer, which already sells most of the individual policies in Maine, or Maine Community Health Options, a new nonprofit start-up.
And it remains an open question whether or not the plans workers can find will cover their current doctors. Blue Shield of California, for example, has dropped nearly two-thirds of the physicians it previously included in its network. Cedars-Sinai Medical Center, one of Southern California’s most prestigious and expensive hospitals, is not included in any plan offered on California’s state exchange. One-third of the hospitals in southern Maine will be excluded from plans offered through the state’s exchange.
With a sense of timing that defies irony, HHS secretary Kathleen Sebelius announced this week that “We’re on track with implementation of the Affordable Care Act. It’s signed, sealed, and it’s delivering — on time.”
There may soon be millions of workers who wish that it wasn’t.
— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.