Politics & Policy

The GOP’s Mandate Strategy

Don’t raise the cutoff to 40 hours.

Republican leadership has an odd idea for one of its first big policy pushes of this Congress: a change to Obamacare that threatens to make the law worse.

The idea, expected to come to a vote in the House on Thursday, is to change Obamacare’s requirement that most employers provide full-time workers with generous health insurance, a rule known as the “employer mandate.” (Or the “employer shared responsibility provisions,” if you prefer Gruber-speak). It sets the definition of full-time work at 30 hours a week.

Republicans have been making the case for some time — and no small number of Democrats and liberals are sympathetic — that employers will reduce workers’ hours to avoid paying the substantial penalty or providing costly insurance, and that this outweighs the benefits of some workers’ getting insurance thanks to the rule.

The current GOP plan, in the main, is to raise the threshold for full-time work to 40 hours. That may be a more reasonable definition, but there are more Americans who work 40 hours a week or a bit more than there are who work just over 30 hours. The proposal risks, theoretically, cuts to the working hours of many more workers. Research by the Obamacare-friendly Commonwealth Fund seems to support this argument; the CBO did not look at the question closely but predicts little total shift in hours either way.

Republicans also propose to change how the law calculates the number of employees a business has, exempting more small businesses from the mandate. While this can only have a salutary effect for workers and wages, there’s little reason not to go much further and repeal the entire mandate.

Repealing a substantial tax on full-time work will increase the supply of labor and the demand for it — both, as it happens, indicators on which the American economy continues to struggle.

One downside to repealing the mandate entirely is that it’s expected to slightly decrease the number of workers with private-insurance coverage and increase the number on Medicaid. Yet the CBO now projects that the proposed Republican plan will have a similar effect without getting rid of the mandate.

There seem to be two plausible reasons to avoid repealing the mandate: Its fines generate a not-insubstantial amount of revenue, so repealing it will increase the federal deficit (estimates range from $46 billion to $149 billion over the next ten years). But the CBO scores the 40-hour-work-week plan as raising the deficit by about $53 billion, and Republicans are not planning to pay for it.

There are plenty of sensible ways to do so, though Democrats, some of whom can be enlisted in getting rid of the mandate, will not like many of them. (The terms of the Medicaid expansion, intended to entice states into expanding their entitlements, could be made a tad less generous, for instance.) The most fiscally responsible thing to do is to dismantle Obamacare, of course. But in the meantime, Republicans should not balk at slightly widening the deficit by repealing a tax on work.

The other issue is that some worry about the appearance of repealing a mandate on businesses while leaving the much more unpopular mandate on individuals intact. But Republicans should be trying to get rid of both. Repealing the employer mandate just stands a much better chance of becoming law during President Obama’s final two years in office.

It is one of the relatively few steps toward repealing Obamacare of which that can be said. Republicans won the 2014 elections handily on the grounds that they would seize such opportunities, not waste them. 


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