The main downside to eliminating the mandate, from the Democratic perspective is money. Why liberals are abandoning Obamacare employer mandate

Robert Gibbs’ prediction that Obamacare’s employer mandate would — and perhaps should — be jettisoned shocked Democrats back in April.

By July, the former aide and longtime confidant of President Barack Obama had a lot more company. More and more liberal activists and policy experts who help shape Democratic thinking on health care have concluded that penalizing businesses if they don’t offer health insurance is an unnecessary element of the Affordable Care Act that may do more harm than good. Among them are experts at the Urban Institute and the Commonwealth Fund and prominent academics like legal scholar Tim Jost.


The employer mandate, Jost wrote in a Health Affairs post in June, “cries out for repair.” Repealing it “might not be such a bad idea,” if it’s replaced with something better for workers and businesses.

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Leading Democrats in Congress aren’t bolting from the employer mandate, at least not before the November election. But the White House has delayed it twice in the past year, dubbed it “not critical” and said it will be phased in more slowly when its begins next year.

The rule that businesses with more than 50 full-time workers offer them affordable health insurance has been a political headache from the start. The nonstop stream of headlines, however anecdotal, about businesses cutting jobs or shortening workweeks to skirt the coverage rules has constantly inflamed opposition to Obamacare.

Chris Jennings, a longtime health policy hand who helped the White House during the final implementation push, says the employer mandate has become a “political irritant” — although he didn’t take a stance on whether it should stay, go or be replaced with some other Democrat-blessed way of helping cover workers.

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“The issue really becomes, ‘Do we need it or do we not need it?’” Jennings said. “It’s complicated to enforce; it is somewhat burdensome to some employers. But it does contribute to the underlying financing of the law.”

Republicans, of course, have always hated the employer mandate. In different times, that could make it a prime target for a bipartisan overhaul. But as with all things Obamacare, election-year politics gum up the gears. Democrats are promising to improve Obamacare, Republicans are vowing to kill it, and neither party wants to let the other score a health care point before Election Day — even when they both find fault with the employer mandate.

“Very few problems are in danger of being solved before the election,” Gibbs said in a recent phone interview. “I don’t think you can wipe away the idea that employers are going to have to contribute. I think there are just far less onerous [ways] … to do something like that.”

Democrats remain committed to the individual mandate — the core of the coverage expansion through the new Obamacare markets. And they aren’t tossing specific benefit requirements either, like the controversial birth control coverage rule that was just curtailed by the Supreme Court in the Hobby Lobby religious freedom case.

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Gibbs predicted that political leaders will start talking more about changes to the employer mandate in the fall but that a solution will have to wait until 2015.

Other health law supporters agree that’s likely.

“We just have a situation where everybody’s stuck. Everybody’s afraid of the election,” said Jost, a law professor at Washington and Lee University. A prominent supporter of the health law, Jost has outlined several replacement ideas to help insure low-income workers.

Republicans and business groups have bludgeoned the employer mandate. They say it’s a job killer, that it’s a reason for the slow pace of the economic recovery and that compliance requires businesses to cope with a mountain of paperwork and intricate rules. Strategists say that getting rid of it would be a priority in a GOP-led Senate.

But scrapping it isn’t a snap for Democrats. The employer coverage rules were part of the ACA’s core philosophy that individuals, employers and the government should all contribute to paying health care costs. Some Democratic constituencies, including labor unions and Obamacare proponents like Families USA, still see it that way.

But the shift among liberal policy experts and advocates has been rapid. A stream of studies and statements have deemed the mandate only moderately useful for getting more people covered under Obamacare. And they too have come to see it as clumsy, a regulatory and financial burden that creates as many problems as it solves.

The main downside to eliminating the mandate, from the Democratic perspective? Money.

Estimates of the mandate’s worth to Obamacare financing range from $46 billion to more than $100 billion over a decade. That helps pay for coverage expansion. Getting a bipartisan deal to scrap the policy is one hurdle; an agreement on how to make up the money could be even harder.

“The employer mandate doesn’t have a huge impact on insurance coverage. But it does raise a lot of money,” Jon Gruber, an MIT economist who advised the White House on crafting Obamacare, wrote in an email. “So really the question is how to (or whether to) make up that money.”

That’s partly why Democrats in Congress haven’t gone after the employer mandate with more fervor. West Virginia Senate candidate Natalie Tennant is a rare prominent Democrat to address repeal.

“Washington should be having a serious conversation about getting rid of the so-called employer mandate. The facts show it doesn’t do much good for the workers who need it most, or help many people get insurance,” Tennant said. “The longer Washington puts off that conversation by delaying the rule instead of getting rid of it, the longer small-business owners are stuck in limbo, waiting to plan for the future or holding off on hiring that extra worker.”

Senate Majority Leader Harry Reid (D-Nev.) has shown little willingness to allow votes on measures repealing or revising it. Republicans see a White House hand in that reluctance.

“The White House is putting a lot of pressure on the Democratic leadership to not allow a vote on a significant change to Obamacare that would likely pass,” said Maine Sen. Susan Collins, one of 31 Republican Senate cosponsors of a bill to repeal the mandate. She’s also pushing a change that would lengthen a “full-time” workweek under Obamacare from 30 to 40 hours.

Republicans calling for mandate repeal have pointed to large businesses like White Castle and Regal Entertainment Group, which say they’ve slashed workers’ hours because of the looming mandate. If Republicans take the Senate in November, they’ll have a chance to propose a repeal on their own terms — and the increasing clamor on the left could help fuel the push.

“Republicans can be expected to continue hammering away at the employer mandate, considering that some Democrats and left-leaning policy analysts have expressed a willingness to do away with it,” former GOP Senate staffer Stephen Northrup, now a lobbyist, wrote in a recent Morning Consult column.

One of the first liberal-leaning groups to get attention on this issue was the Urban Institute. In a May report titled “Why Not Just Eliminate the Employer Mandate?” Urban experts argued that repealing the requirement would remove “distortions” in the labor market. They estimated that about 200,000 fewer people would get health coverage, a relatively small decrease compared to the millions expected to get insured under the ACA. Urban noted that most big businesses already cover workers — and they do so voluntarily, with no mandate. And they said that’s unlikely to change.

The left-leaning Commonwealth Fund made similar arguments. Harvard health care economist David Cutler, who helped lay the administration’s intellectual foundation for the health law, said eliminating the employer mandate is “not a huge deal” unless employers drop coverage en masse, which he sees as unlikely.

White House officials still say they’re not ready to turn away from the mandate for good, and officials have swatted away Gibbs’ previous predictions of inevitable demise.

And the mandate still has defenders, even among some Democrats running in November.

Sen. Jeanne Shaheen (D-N.H.), who’s been challenged by Republican Scott Brown, said in an interview this spring that employer-sponsored coverage is the foundation of America’s health care system and that the employer mandate “continues that.”

Families USA executive director Ron Pollack also sees calls for repeal as misguided. “When you still have 9 percent of the medium-size employers who are not providing coverage and even a tiny percent of the largest employers, I think having a mandate is likely to improve that coverage,” he said.

Some unions, which have been unhappy with aspects of the health law, say the employer mandate is also a matter of fairness.

“The ACA is already rife with carve-outs and loopholes for large employers, even though the law was designed to have them share responsibility,” said Tim Schlittner, a spokesman for United Food and Commercial Workers. “The administration should focus on improving the law for consumers and workers, not big business.”

Businesses and industry experts wouldn’t be surprised by another delay. But they dislike the piecemeal postponements.

“It’s prolonged uncertainty and most business owners would rather have certainty,” said Matt Haller, a spokesman for the International Franchise Association. “You spend all this money as a small business to hire more people to help you comply with this costly, onerous law and then they kick the can down the road for another year.”