Yuval Levin discusses the major implications of the decision to delay the implementation of Obamacare’s employer responsibility provision. First, there are the implications for the individual mandate:
The individual mandate. . .may now be politically untenable, since, by eliminating the employer mandate but keeping the individual mandate, the administration is freeing large employers, but not workers, of a burden and would put the government in the position of causing people to be dumped from employer coverage and then fining them for not getting individual coverage in an unfamiliar and expensive new system with lots of growing pains.
This is certainly in line with the administration’s broader corporatism, but it is a politically uncomfortable expression of that approach and a huge vulnerability. A move to at least delay the individual mandate could be pretty hard for Democrats to resist.
Other concessions may follow:
The administration will certainly face added pressure to ignore various taxes, rules, and mandates that can be shown to have detrimental effects on the economy or on some constituency—and pretty much every line of Obamacare falls into that category in one way or another. They have just announced that they can implement or ignore whatever portions of the law they wish, and so will be feeling lots of pressure from lots of people with lots views about lots of provisions.
The delay was a political move, of course, but Levin suggests that it may backfire:
Moreover, by announcing that they can implement or ignore whatever portions of Obamacare they want, the administration is also taking even more direct ownership of any other problems that arise with implementation, since this move suggests they believe that implementation is entirely up to them and they are not really bound by the particulars of the law. This greater ownership of troubles to come will be a particular problem for them with regard to employer dumping and the exchanges.
Any such dumping (rightly or wrongly, after all some significant dumping was already expected anyway) will be understood as resulting from the special favor the administration has now done for large employers. And since more people will be in the exchanges than otherwise would have been, the difficulties and uncertainties in that system will be a bigger political problem. This amounts to a very risky bet on the viability of the exchanges.
Finally, and perhaps most significantly, Obama’s move increases the the threat to the viability of exchanges:
Under the law, eligibility for exchange subsidies depends on an individual not receiving an affordable offer of qualified insurance from an employer. If employers will now not be required to report on their insurance offerings in 2014, I don’t see how the government will be able to determine eligibility for subsidies, and therefore how the exchanges will be able to function.
Making subsidies available without proof of eligibility would be very expensive and destabilizing to the insurance system, and would also require the retraction of such subsidies if the employer mandate ever does return. Coming up with other ways to prove eligibility would be very difficult at this late stage (as exchanges are supposed to start operating in three months), and would also be totally lawless—though I recognize that is a rather quaint and old fashioned concern in the age of Obama.
Any losers in that process could sue, and the federal courts would have a hard time sustaining the administration’s novel approach to executive power. The exchanges are utterly central to the way Obamacare is supposed to function, and the delay announced yesterday leaves the prospects for their proper functioning even more grim than they already were.
President Obama pretty clearly believes that, politically speaking, the only thing worse than delaying implementation of Obamacare’s employer responsibility provisions would have been to implement them as scheduled. He may be right. But if so, Levin shows that he’s not right by much.