August 15 2013

Translating ObamaCare’s Impact Into the Real World

Carrie L. Lukas

The Atlanta Journal Constitution has a thoughtful piece describing how our country’s health insurance system—and specifically ObamaCare’s new mandates—are impacting real people and businesses.  It’s an article that people should read so that they have another window into how these mandates translate into people’s lives, something that is so often lost in the discussion of mandates and statistics. 

Yet there’s an aspect of the article that bothers me:

The mandate affects a "relatively small percentage of employers," said Edwin Park, vice-president for health policy at the Center on Budget and Policy Priorities, a not-for-profit Washington, D.C.-based think tank. "This really doesn't hit a lot of firms." 

According to a survey of employers by consulting firm Mercer, 98 percent with 500 or more workers already offer a health plan, 92 percent of those with 200 to 500 do, and 80 percent with 50 to 200 workers do. Of those with 10 to 50 workers, 56 percent offer coverage, but those businesses are exempt from the mandate and penalty.

The fact that most employers already provide health insurance speaks to why this employer mandate was largely unnecessary in the first place.  Moreover, the minority of businesses that aren’t providing coverage will be profoundly affected by the mandate.  They aren’t not providing health care coverage because it didn’t occur to them.  They can’t afford to or will have to (as the CBPP analyst helpfully suggests) rearrange their compensation packages to do so.  That means lower take-home pay for workers.  Is that really what should be forced upon workers and employers?

From a macro level, it matters a lot what happens to the minority of firms affected by this mandate. Here’s the US Census Bureau’s breakdown of firms by size, which shows there are more than 600,000 establishments with between 20-500 workers.  Even if a small fraction of them aren't currently providing insurance and will be affected by ObamaCare's employer mandate, that still means tens of thousands of business and hundreds of thousands of employees.  This is a big deal for those firms.  It means higher employment costs, which will have to come from somewhere, and will largely come out of workers’ paychecks either by lower take-home pay or fewer jobs. The affects of this squeeze on hiring and pay will ripple through the economy, making ourcurrent problems worse.

Liberal analysts sniff at numbers showing that only a small fraction of businesses will be hurt by ObamaCare mandates.  But translate those numbers into the real world and that’s a lot of real pain for real people.   

 
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