Apples And Oranges: Employer Mandate And Individual Mandate

On the heels of last week’s employer mandate delay and a few other smaller – but not insignificant – delays in ACA implementation, it’s not surprising to see that Republicans in Congress are pushing hard for a delay of the individual mandate too, with Speaker Boehner echoing many of his conservative colleagues’ position with his thoughts on the matter: “Is it fair for the president of the United States to give American businesses an exemption from his health care law’s mandates without giving the same exemption to the rest of America? Hell no, it’s not fair.

It’s anyone’s guess what will happen in Congress between now and the end of the year.  States like Colorado that opted to run their own exchanges and got going on the process soon after the ACA passed in 2010 are likely to be less impacted by relaxed federal guidelines, since they’re probably exceeding minimum standards already.  Patty Fontneau, CEO of Connect for Health Colorado (the Colorado exchange) noted in a meeting this week that the delay of the employer mandate doesn’t change anything for the Colorado exchange, since the exchange will be offering health insurance for individuals and small businesses, while the employer mandate focuses on businesses with more than 50 employees.   If anything, the delay would mean that that Connect for Health Colorado might have more eligible enrollees, since some people who Mandate for Individuals to purchase health insurance is different than the employer mandatework for large employers might still be on their own to purchase individual health insurance next year instead of getting it through their employers (as might have been the case if the employer mandate had not been pushed back a year).

Adding to the confusion is the Senate bill that was introduced this spring to officially define full time as 40 hours a week (S 701, Forty Hours is Full Time Act of 2013).  Since the employer mandate for large businesses to provide health insurance to their employees only applies to full-time employees, the definition of full time is critical to the discussion.  While most of the public generally accepts the idea that full time is 40 hours a week (although my nurse friends who work three 12 hour shifts per week most definitely consider their job to be full time…), the ACA is worded so that employees working over 30 hours per week (assuming there are at least 50 total employees) would have to be provided with health insurance in order for the employer to avoid a fine.  Senate Bill 701 has received a lot of attention in the media, but Govtrack gives it a 0% chance of being enacted, so it appears that the 30 hour rule in the ACA will likely still be in place when the employer mandate goes into effect in 2015.

Getting back to the issue of the individual mandate, there are a few points that need to be made.  Speaker Boehner’s talking points are designed to appeal to people who aren’t particularly familiar with the details of the law, or with the specifics of how health insurance demographics currently look.  His “Hell no, it’s not fair” comment is a rallying cry for people who don’t want to be told that they have to have health insurance, and might not be completely familiar with how much of a subsidy a lot of Americans are likely to get in the exchanges in order to make health insurance more affordable.

But the employer mandate isn’t going to impact that many businesses even when it does go into effect.  96% of businesses with 50 or more employees already offer health insurance to their employees.  This is in stark contrast to businesses with fewer than 50 employees:  Only 36% of them offer health insurance.  So while there are a few stragglers when it comes to large employers, almost all of the businesses that will be mandated to offer health insurance to full time workers in 2015 are already doing so.  Small businesses will be able to purchase health insurance via state-based exchanges, but the majority of them do not currently offer health insurance and the employer mandate will not require them to do so.

While only 4% of large businesses will be impacted by the employer mandate, the individual mandate is intended to shrink the population of uninsured Americans, which currently stands at 16% of the country.  And although the other major provisions of the ACA can continue to operate without the employer mandate for the first year, delaying the individual mandate would effectively cripple the entire law and would almost certainly require that the whole ACA be delayed as well.  Without the individual mandate, the prices for guaranteed issue health insurance in the individual market would be even higher than they’re already projected to be next year.  And although states like Colorado that have worked very hard to get their exchanges up and running on time would still be able to implement their exchanges this fall, it’s unlikely that they would be able to get enough enrollees to become financially viable without the individual mandate.

Overall, I find it disingenuous for politicians to compare the employer mandate and the individual mandate as provisions that should be given equal treatment.  The individual mandate is a far more integral aspect of the law, and it’s an essential component of having individual health insurance be guaranteed issue starting in 2014.  Getting rid of pre-existing condition exclusions, rate-ups and denials in the individual market based on health underwriting has widespread public support.  But we can’t have our cake and eat it too.  Without the individual mandate, it wouldn’t be feasible to do away with medical underwriting in the individual health insurance market.  As long as the individual mandate stays in place and the exchanges get off the ground as planned this fall, the ACA will likely be successful in beginning to lower the percentage of Americans without health insurance, starting in January.  It won’t happen overnight, and 2014 will probably be filled with lots of hitches and glitches.  But the delay of the employer mandate is not a death knell for the ACA.  The rest of the law can continue on, probably with considerable success in states that have worked hard to implement well-planned exchanges.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

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