New research suggests a contentious component of Obamacare may be more trouble politically than it's actually worth.
Repealing the Affordable Care Act's "employer mandate" would eliminate labor market distortions, cut opposition to the health law and leave only 200,000 more Americans without health insurance, according to new research by the Urban Institute, a left-leaning think tank.
The mandate requires large businesses with 100 or more workers to provide affordable health insurance for full-time workers or face a penalty of $2,000 per employee beginning in 2015. New rules allow these employers to cover only 70 percent of eligible employees in 2015 and 95 percent in 2016 and beyond.
Employers with 50 to 99 workers have until 2016 to comply with the mandate or face similar penalties.
The ACA originally called for the penalties to begin in 2014, but the Obama administration delayed their enforcement after complaints from business groups.
The employer mandate has been controversial since the health law was passed in 2010. Critics claim the provision gives businesses a financial incentive to keep their employees on part-time schedules and their workforce below the levels that mandate coverage. That hurts job creation and employee pay.
The GOP also claims that delays in implementing the employer mandate amount to corporate favoritism.
As a result, Republicans want the Obama administration to delay enforcement of the ACA's individual mandate, which requires most Americans to have health insurance or pay a fine for non-compliance when they file their 2014 federal income taxes next year.
But researchers at the Urban Institute's Health Policy Center estimate that most employers wouldn't drop coverage if the penalties were eliminated, in part, because of the tax benefits. They estimate that 500,000 would lose employer coverage after the mandate is repealed. That's a decline of just 0.3 percent.
Medicaid and other forms of coverage would pick up the slack, however, leaving roughly 200,000 people without coverage, an increase of just 0.6 percent. The non-partisan Congressional Budget Office estimates one million people would lose coverage if the employer mandate is eliminated.
Repealing the mandate would cost the government nearly $4 billion in employer penalties in 2016, however. The repeal would also cause more people to seek Medicaid coverage and tax credits to purchase individual marketplace coverage. That would cost the government an extra $4.3 billion a year or about $46 billion from 2014 to 2023, researchers estimate. The CBO projected higher costs of $130 billion over the next decade.
Since the employer penalties help pay for the tax credits that help people purchase marketplace coverage, Congress would have to come up with a new source of revenue - about $130 billion over ten years.
"Reaching political agreement on new sources of revenue is never an easy task; however, the policy tradeoffs are straightforward," the report said. "Concerns over labor market distortions and employer financial burdens related to the ACA's employer penalties can be eliminated with little relative impact on overall insurance coverage or the distribution of that coverage: the cost is agreeing upon an alternative source of $130 billion in federal revenue over ten years."
To view the report, go to -bit.ly/1oxAiOm