On July 3, the Obama administration quietly revealed that it will not enforce the Affordable Care Act’s employer mandate until 2015, though the law unambiguously requires that it goes into effect Jan. 1, 2014. Administration spokespersons depicted the change as a mere tweaking. That’s untrue. It will affect 10 million workers, double the number of enrollees in the health exchanges and add a net $60 billion to the cost of Obamacare in 2014 alone.
The delay is the administration’s desperate strategy to prop up the health exchanges, which are scheduled to open Oct. 1. The administration fears an under-enrollment crisis. Weeks ago, Secretary of Health and Human Services Kathleen Sebelius implored the NBA and NFL to sell young fans on the idea of buying coverage on the exchanges. Young healthy enrollees are needed to offset the costs of the sick and middle-aged and prevent premiums from spiking even higher than they already have.
But the sports leagues said no to shilling for Obamacare. So, as a last resort, the administration postponed the employer mandate â?? making sacrificial lambs of the 6.9 million uninsured full-time workers whose employers otherwise would have been compelled to start providing them with coverage on Jan. 1 or pay a penalty. (Data from the Employee Benefit Research Institute)
The administration’s edict also clobbers 3.1 million workers currently covered by mini-med plans (plans that have annual or lifetime caps on benefits.) These plans are allowed under waivers granted by the administration, but the waivers expire Jan. 1, 2014, just when the employer mandate was supposed to go into effect. These workers will also be left with no on-the-job coverage.
In total, 10 million workers will be forced to sign up for an exchange plan or pay a penalty to the IRS for not being insured.
Some single workers will opt to pay the $95 first-year penalty. After all, healthy people in their 30s or 40s won’t see the financial sense in writing a premium check for $125 or $150 or even $200 every month when the cheapest plan has a $5,000 deductible.
They’d rather make a car payment.
But uninsured workers with dependents will likely enroll in the exchange plans, more than doubling the expected cost of exchange subsidies in 2014. Last February, the IRS ruled that if workers have access to affordable on the job coverage, their dependents won’t qualify for subsidies on the exchanges. With the employer mandate delayed, workers and their dependents will be eligible.
Assuming that only half the 10 million workers seek exchange coverage for themselves and dependents, the cost to taxpayers will be a staggering $48 billion to $50 billion the first year. Add to that the $10 billion in foregone penalties the Congressional Budget Office had predicted the employer mandate would produce the first year. The total cost to you and me of delaying the mandate for a year will reach at least?$60 billion. That’s before fraud.
Fraud will be a major added cost. On July 5, the administration quietly released a ruling that state exchanges will not routinely verify the income and on-the-job coverage of those applying for subsidies. Across the nation, community activists are being hired to encourage enrollment. They will be paid for each person who signs up for a health plan. There is no penalty for enrolling those who lie about their eligibility or who have no ability to meet their monthly premium payments. Get ready for a premium default crisis, similar to the mortgage crisis.
But the biggest crisis facing this nation is constitutional. Last week’s edict regarding the Obamacare exchanges is the latest and most extreme instance of President Obama rewriting the law â?? in defiance of the authority of Congress and the people who elect that body. The Obama health law provides that most working people will get their health coverage through their employer. The president does not have the authority to shift that cost to taxpayers in order to prop up the floundering health exchanges. The House of Representatives must use its constitutional authority over spending to foil this assault on the rule of law.
Betsy McCaughey is a former lieutenant governor of New York, founder of the Committee to Reduce Infection Deaths and the author of “Beating Obamacare.”