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Ruth Marcus: The real hurdles in Obamacare

BY RUTH MARCUS Published: July 6, 2013

Some critics have argued that the employer penalties, $2,000 to $3,000 per worker, perversely incentivize employers to drop coverage because paying the fine would be less costly than providing insurance and because their employees would be able to purchase coverage on exchanges. Yet in Massachusetts, where the employer penalties were far lower than those in federal law, the share of employers offering insurance rose after the mandate took effect.

At the same time, the precise structure of the federal employer mandate is ungainly — or, less charitably, dumb. It kicks in for employees working more than 30 hours a week. Employers may be tempted to game the system — and hurt workers — simply by reducing hours, converting full-time employees to part-timers.

So what will be the impact of the delay? There is, granted, a certain irony in the administration freeing employers from the responsibility to provide coverage while individuals continue to face a penalty if they do not obtain it.

Still, as noted earlier, employers that offer coverage now aren't about to drop it because of this change. As for the relatively small number of employers that would have added coverage in response to the mandate, their workers aren't out in the cold. They will be able to buy insurance on the exchanges and, because most are low- to moderate-income, will be eligible for federal subsidies to pay the cost.

Similarly, workers whose employer-sponsored coverage is unaffordable (because it exceeds 9.5 percent of incomes) or fails to meet minimum standards are also eligible for subsidized insurance on the exchanges.

In short, the federal government loses income from the expected penalty payments — $10 billion, the Congressional Budget Office estimates. The complications that induced the administration to postpone the employer mandate (how to count workers' hours or implement reporting requirements) are just that — complications, not insurmountable obstacles.

Expanded access to insurance — the fundamental goal of health care reform — remains intact.



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