July 2, 2013; The Hill
It’s not just commercial enterprises that are private sector employers. Nonprofits are employers, too. As of 2011, according to these statistics collected by the Agency for Healthcare Research and Quality, there were nearly a half million nonprofit establishments with paid employees:
Compared to for-profit employers, nonprofits in the pre-ACA era have been good employers regarding the provision of health insurance:
One out of every five individuals in the U.S. doesn’t have health insurance, and that includes the workers at the more than 47 percent of nonprofit employers with fewer than 50 employees. The importance of employer-provided health insurance is critical for lower wage employees, and unfortunately, many nonprofit employees don’t get particularly high wages.
As a result, the announcement that the Obama administration will delay for one year the mandate for employers to provide their employees with health insurance may concern some nonprofits. The Hill called the administration’s announcement “stunning” and “an enormous victory for businesses that had lobbied against the healthcare law.” The site even hinted that there might be an element of political calculation in this announcement, because the delay until 2015 means the mandate will be implemented after the 2014 midterm elections during which some Democratic candidates might be skittish about defending the ACA.
White House advisor Valerie Jarrett said that the delay was intended to give employers “more time to comply with the new rules” and “the time to test the new reporting systems and make any necessary adaptations to their health benefits” and to “cut…red tape and simplify…the reporting process.”
Something is awry here. It’s not just that the White House released the news about the delay in two blog postings—Jarrett’s on the White House webpage and Assistant Secretary Mark Mazur’s on the Treasury blog—just before the Independence Day holiday, rather than as a formal announcement from HHS. By the numbers as they currently stand, most employers that would be affected by the mandate are currently in compliance, and the penalty for non-compliance would only apply to a small percentage of employers. The employer mandate only applies to firms with 50 or more employees, but for both for-profit and nonprofit employers, most of those firms offer their employees health insurance already:
Percentage of firms with fewer than 50 employees offering health insurance
Percentage of firms with 50 or more employees offering health insurance
In other words, most employers aren’t really facing this mandate. The charges from the likes of Senator Orrin Hatch (R-UT) that the employer mandate is a “job-killing requirement on employers” is hard to fathom given the numbers. At the same time, it is difficult to imagine that the administration couldn’t get this requirement into gear for 2014, given the relatively small proportion of employers that would face significant compliance challenges.
However, individuals will still face the 2014 individual mandate. Those individuals who don’t get access to insurance through their employers will still have to acquire insurance on their own through the state and federal exchanges. The delay in the employer mandate effectively allows employers to “dump” their uninsured employees into the health exchanges. While some observers suggest that this might be beneficial for some people because the exchanges might offer more robust coverage than many employers, the Wall Street Journal reported that the health insurance plans being offered on the exchanges look like they could double or triple insurance rates for healthy individuals, though offering some breaks for less healthy individuals. The WSJ survey examined the plans to be offered in eight state exchanges, suggesting that many insurers with multiple kinds of insurance plans do not at this point plan to offer much of a competitive range that would lower premiums on the exchanges.
Former economic advisor to vice president Joe Biden, Jared Bernstein, raises a different concern about the surprise announcement of the Obama Administration’s delay of the employer mandate. Although a supporter of the ACA, Bernstein is concerned that larger employers would drop coverage for their employees—which, without the mandate, they could do without facing a fine. By doing so, the employers would drop their health insurance expenses and, for lower-wage employees who might qualify for federal subsidies, shift the cost to government. Columnist Harold Meyerson, no less a supporter of health insurance reform than Bernstein, wondered whether the employer mandate, meant to cover employers of 50 or more employees who work minimum 30-hour weeks, might itself be problematic, as employers, particularly in the service sector (especially retail and leisure), typically hire for lower average workweeks than manufacturers.
All of this would have been obviated by a single payer system, but it’s too late to turn the clock back in that direction, just as it is too late for Senator Hatch and his colleagues to imagine that they can undo the 2010 enactment of the Affordable Care Act. So the critical factor lies with the Obama administration: will it push ahead aggressively with a rapid rollout and implementation of health insurance reform, or will it allow employers and insurers leeway to make a complex system of health insurance coverage even more difficult to see to fruition?—Rick Cohen