After delaying the employer mandate to provide Obamacare health insurance to all full time employees for a year, the administration has delayed the mandate for medium size business for a second year. It has also relaxed the mandate for large businesses (they only have to cover 70% of their workers the next year).
All of this is lawlessness of course. The statute clearly says that the mandate is supposed to kick in this year. So why is President Obama taking the extra-constitutional step of letting employers temporarily off the hook?
The reason is not hard to understand. Millions of workers are in danger of losing their jobs or their other fringe benefits (such as matches to a retirement savings plan) or being forced to work part-time. Many of them are employees of hotels, restaurants and large retail stores. And these workers just might take out their anger on Democratic candidates in next fall's election.
Take a low-wage worker earning, say, $10 an hour and working 30 hours a week. This worker's annual income is a little more than $15,000 a year. But the average cost of employer-provided coverage in the United States is more than that.
That's right. Health insurance for a family costs more than this worker's entire annual income!
Here is what the new health reform law does.
First, it requires the employer to provide a rich package of benefits or pay a hefty fine. Employers must pay $2,000 per employee per year to Uncle Sam if they fail to offer affordable insurance to their full-time employees. The fine climbs to $3,000 if the employer offers the wrong kind of insurance and the employee seeks subsidized insurance in a health insurance exchange.
Second, the law requires employers to offer the same kind of insurance on the same terms to low-wage employees as it offers to high-wage employees — although this provision has also been temporarily delayed. Employers don't have to pay any of the premiums for the employees' dependents. But if the employer is paying most of the premium for the dependents of highly compensated employees the company must do the same for low-wage employees.
Third, the law provides no financial help to the typical business to make the mandates affordable. Say a low-wage employee is not offered health insurance by his employers. Then he can get almost fully subsidized insurance in a health insurance exchange. But there is no new subsidy for those forced to get insurance at work.
John C. Goodman is President and CEO of the National Center for Policy Analysis, Senior Fellow at The Independent Institute, and author of the acclaimed book, Priceless: Curing the Healthcare Crisis. The Wall Street Journal and National Journal, among other media, have called him the "Father of Health Savings Accounts." He is also the Kellye Wright Fellow in health care. The mission of the Wright Fellowship is to promote a more patient-centered, consumer-driven health care system.
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