The Obama administration has just created “one of the broadest and deepest advertising networks” they could have imagined to spur enrollment in the new health-care exchanges, according to American Action Forum president Douglas Holtz-Eakin.
Because of the administration’s decision to delay the employer mandate, Holtz-Eakin said at a Capitol Hill briefing on Monday, the administration’s rush to boost enrollment in the exchanges could perversely be driven by employers.
Employers have unmatched communication channels to explain to their employees why it is advantageous for them to get taxpayer-subsidized coverage from the exchanges instead of getting insurance through their employer. The Obama administration announced last week it would delay until 2015 implementation and reporting requirements for the mandate requiring employers to provide insurance or pay a penalty.
“The Obama administration has just put dropping health coverage on sale for employers,” Holtz-Eakin said. “There is an unambiguous incentive now for employers to stop providing health insurance, prepare to pay the penalty, and send their employees to the exchanges instead, where they can get much more heavily subsidized coverage,” Holtz-Eakin said. “They now have a year to make the transition.”
He said the administration’s was “deviously brilliant” in its move to simultaneously postpone the employer mandate and allow enrollment in the exchanges without verification of income or employer coverage.
Income verification is one of the most complex parts of Obamacare implementation, and requires cross-checking information on each application with seven different government agencies. In the rules announcing the delay, the administration acknowledged the difficulty of getting verification systems up and running, saying a“large amount of systems development on both the federal and state side . . . cannot occur in time for October 1, 2013,” meaning income verification “is not feasible for implementation for the first year of operations.” The administration will, instead, rely on an honor system for reporting.
The Obama administration has been scrambling to raise funds to pay “navigators” — workers who will enroll people in exchange coverage — and there has been a great deal of concern that older, sicker people would be more likely to enroll in the exchanges than younger, healthier Americans, who would forgo enrollment.
Allowing people to enroll in subsidized coverage without income verification and giving employers an incentive to push their employees into the exchanges changes that dynamic. But it also creates significant new problems if people receive more subsidies than their income warrants through innocent mistakes, and creates a huge opportunity for fraud by those who intentionally lie about their income. The legal repercussions are enormous for the administration’s “temporary” fix to the complexities of reporting.
Diana Furchtgott-Roth of the Manhattan Institute said that the price tag for Obamacare will soar as a result of last week’s announcements. “The program will cost much more because there is no income verification required for people to qualify for subsidies in the exchanges, so some might understate their income and get more subsidies,” she explained.
The two economists agreed that the budgetary consequences are enormous — millions more people than originally estimated will lose employer-based coverage and move instead into coverage subsidized by taxpayers in the exchanges. They also agreed that employers will be unlikely to change other planned responses in their hiring behavior, such as shedding jobs and pushing workers to part time, as a result of the one-year delay of the employer mandate.
The decision announced last week to rely on the honor system for subsidies is part of a larger pattern of the administration’s adjusting the law to suit its political objectives. Holtz-Eakin pointed out that the administration had earlier announced it would not enforce the individual-mandate penalties for people who would been eligible for the Medicaid expansion but who live in states that decide not to expand the program. But, they said, there are significant political liabilities for the administration in giving employers a temporary pass from Obamacare while the mandate – and penalties – for individuals remain in place.
Small businesses are especially hard hit by the mandate. An earlier Gallup poll had found that 41 percent of small businesses surveyed had frozen hiring because of the health-care law. One in five said they already have reduced the number of employees in their business “as a specific result of the Affordable Care Act.” Large employers also are carefully navigating the complexities and ongoing uncertainties of Obamacare.
The briefing for congressional staffers was held on Monday in the U.S. Capitol and was jointly hosted by the Galen Institute, the American Enterprise Institute, and the Heritage Foundation.