Study Questions Need For Employer Health Care Requirement The component of Obamacare that requires employers to provide health insurance has been delayed twice. Now, groups on both sides of the political spectrum are arguing to get rid of it altogether.
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Study Questions Need For Employer Health Care Requirement

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Study Questions Need For Employer Health Care Requirement

Study Questions Need For Employer Health Care Requirement

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ROBERT SIEGEL, HOST:

It's ALL THING CONSIDERED from NPR News. I'm Robert Siegel.

MELISSA BLOCK, HOST:

And I'm Melissa Block. When the Affordable Care Act was first unveiled, business groups railed against a particular provision. It requires companies with 50 or more employees to provide health insurance for their full-time workers. The Obama administration responded by pushing back the deadline for that coverage, so it hasn't yet taken effect. And now support for the so-called Employer Mandate is eroding in some surprising quarters. As NPR's John Ydstie reports, that's putting the provision's future in doubt.

JOHN YDSTIE, BYLINE: "Why Not Just Eliminate The Employer Mandate?" That's the title of a study done by the Urban Institute, a center-left think tank based in Washington, D.C. The study lists a number of reasons why dropping the mandate might be a good idea. Linda Blumberg, one of the authors, says, first of all, requiring firms to offer health insurance could be a bad deal for lots of low-wage workers.

LINDA BLUMBERG: A lower-income worker is going to do better, most likely, financially by getting subsidized coverage through one of the health insurance marketplaces, instead of through their employer.

YDSTIE: That's because many of those workers may make so little that they qualify for free coverage under Medicaid. Even workers making as much as two-and-a-half times poverty level wages would get subsidies in the Obamacare exchanges. And that could make it a better deal than coverage provided by their company. Now, you're probably saying, wait a minute. If your employer has a health insurance plan and is paying a big chunk of your premium, isn't that a better deal? Not really, says Mark Pauly. He's a health care economist at the University of Pennsylvania's Wharton School.

MARK PAULY: Bosses don't give you anything. You're paying the lion's share of the cost of your own benefits, just as part of your compensation for your work.

YDSTIE: What Pauly and lots of economists believe is that your company views its contribution to your health insurance as part of your total compensation. So if you get some of your compensation in health care benefits, your cash wages are likely to be lower. That means you are actually the one paying for your employer-sponsored health care.

The reason employer-sponsored plans do make sense for lots of workers is because they allow those workers to buy their insurance with tax-free dollars. But for low-income workers, who may not pay any income tax, there's little benefit. Now, some supporters of the Employer Mandate say it's necessary in order to keep companies from dropping their insurance coverage altogether. But Linda Blumberg says employers already have plenty of motivation to keep offering coverage.

BLUMBERG: And employers want to provide that coverage to their workers because that's how they attract them and retain them.

YDSTIE: Finally, the Urban Institute study also concludes that the Employer Mandate won't be very helpful in increasing insurance coverage. It finds the mandate will likely boost coverage by only about 200,000 people. So with these kinds of negatives, what's the incentive for hanging onto the Employer Mandate? Jon Gruber, an MIT economist who helped design the Massachusetts health care exchange under Gov. Mitt Romney and consulted with the Obama administration on the ACA ,says the most important incentive is money.

JON GRUBER: The right way to think about the Employer Mandate is really as a a revenue-raising tool. It does raise a lot of money.

YDSTIE: In fact, keeping the mandate would reduce federal deficits by $130 billion over the next 10 years, according to the Congressional Budget Office. But Gruber acknowledges those savings come largely because the government would be paying fewer subsidies to low-income workers. Gruber says the mandate has its pluses and minuses. But he thinks there's about an even chance it won't ever take effect.

GRUBER: The strongest argument, probably, for getting rid of this is political, which is that, while this is really not a very fundamental piece of the law, it's catching a huge share of the flack around the law.

YDSTIE: The Obama administration continues to stand by the Employer Mandate arguing, it will help get health insurance to more people and save taxpayers money. John Ydstie, NPR News, Washington.

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