The Affordable Care Act's "employer mandate" continues to be one of the most controversial provisions of the health reform law.
A recent brief by the Robert Wood Johnson Foundation and Urban Institute analyzed whether the employer mandate is really needed. Their conclusion is that eliminating the employer mandate would not reduce insurance coverage significantly.
Under the Affordable Care Act's employer mandate, employers with 50 or more full-time equivalent (FTE) employees are subject to a penalty if at least one of their full-time workers obtains a Marketplace subsidy. Employees are eligible for a subsidy if they meet income requirements and are not offered affordable and minimum coverage through work. Applicable employers can avoid penalties by offering coverage to at least 95 percent of full time employees. The Administration has delayed the requirements for employers with 50-99 FTEs until 2016, for larger employers with 100 FTEs until 2015, and softened requirements for that first year.
Is the ACA Employer Mandate Really Needed?
The brief finds that eliminating the employer mandate will not reduce insurance coverage significantly. In addition to having little effect on coverage, eliminating the employer mandate would eliminate labor market distortions in the law and lessen opposition to the law from employers.
The brief concludes that:
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Eliminating the employer mandate would eliminate labor market distortions in the law, lessen opposition to the law from employers, and have little effect on coverage.
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Alternative sources of revenue would have to be found to compensate for the federal loss of penalties.
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Both the elimination of the mandate and creating a new source of revenue to replace it will require legislation.
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The individual mandate, together with the Medicaid expansion and income related subsidies, is what is critical to expanding coverage under the ACA; the employer mandate is not.
Brief and image source: RWJF
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