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In 1974, President Richard Nixon’s health-care plan proposed forcing employers to pay 75 percent of the cost of basic health insurance for their employees, with some breaks for small businesses.
In 1994, President Bill Clinton proposed forcing employers to pay 80 percent of the cost of basic heath insurance for their employees, though a somewhat confusing series of caps meant that smaller businesses would end up paying much less.
But by 2010, health reformers had learned their lesson.
Obamacare doesn't force employers to pay most of their employees' health-insurance bills. Instead, it says that employers with more than 50 workers need to pay a penalty of between $2,000 and $3,000 if they don't offer insurance, or if a large number of their employees need to use taxpayer subsidies.
To put that in perspective, the average employer-sponsored insurance plan costs around $16,000. Compared to that, a $2,000-$3,000 penalty is a pittance. For all sorts of reasons, employers don't seem to want to drop coverage, but if they did, this wouldn't stop them.
This was a huge win for business. They managed to scare Congress away from demanding that they pay for the bulk of their employee's health insurance. The employer mandate that ended up in Obamacare -- like the one that ended up in Mitt Romney's reforms -- is more of a token penalty than a major policy. It brings in a bit of money, and boosts coverage on the margin, but it's really there to satisfy demands that employers don't get a totally free ride.
Now business has scored another win: They've gotten the mandate delayed from 2014 to 2015. The White House swears this is a one-year delay to streamline the reporting requirements. But business lobbyists will no doubt work to make it an endless delay.
For reasons explained here, I'd be happy to see them succeed. There are smart ways to construct an employer mandate. But the specific employer mandate that ended up in Obamacare is not smartly constructed. In the small number of firms who are right around 50 employees and don't offer insurance, it creates an incentive against hiring more full-time workers, and for cutting the hours of some of the full-time workers you already have. This was obvious from the day it was introduced.
In the very long-run, I'd be happy to see employers out of the health insurance game altogether. That's why I was a fan of Ron Wyden and Bob Bennet's Healthy Americans Act, which converted employer health-care payments to wages, and then sent people to buy health insurance on their own.
But in the near-term, we can't have a health-care system that both keeps employers at the center of the health-insurance market and asks nothing of them -- even though that's exactly what business wants, and what they seem ever closer to getting.
Congress should use the next year to improve the employer mandate. There are plenty of better ideas out there: The Senate Health Committee's bill used a mandate with a smaller penalty, but one that accrued to both full-time and part-time workers. The House bill tied its penalty to the percentage of payroll an employer spent on health care. We can do better, and we should.
And then, in a couple of years, when the exchanges are up and running and expensive employer-based plans are getting hit by the "Cadillac Tax", perhaps employers will be open to rethinking whether they should be in the health-insurance business at all. If and when that happens, Congress should happily help them ease out of it.
Wonkbook's Numbers of the Day: "98 percent of employers with more than 200 employees offer health insurance, as do 94 percent of employers with 50 to 199 employees."
Wonkblog's Graph of the Day: The libertarian states of America, where both marijuana and same-sex marriage are legal.
Wonkbook's Top 5 Stories: 1) Obama admin delays employer mandate; 2) getting the House onboard immigration reform; 3) regulators aim is on the money; 4) Snowden's struggle; and 5) federal abortion ban floated.
1) Top story: Everything you need to know about Obamacare's delayed employer mandate
White House delays employer mandate requirement until 2015. "The Obama administration will not penalize businesses that do not provide health insurance in 2014, the Treasury Department announced Tuesday. Instead, it will delay enforcement of a major Affordable Care Act requirement that all employers with more than 50 employees provide coverage to their workers until 2015. The administration said it would postpone the provision after hearing significant concerns from employers about the challenges of implementing it." Sarah Kliff in The Washington Post.
Primary source: "Continuing to Implement the ACA in a Careful, Thoughtful Manner," Mark J. Mazur, Assistant Treasury Secretary for Tax Policy.
The politics of delaying Obamacare. "The White House just swapped one political headache for another...By delaying a requirement that all large employers provide health insurance, the Obama administration heads off the unseemly spectacle of companies vowing to cut jobs or workers’ hours to avoid the costly mandate. But the late Tuesday action is not a free pass: It contributes to critics’ claims that the White House does not have the ability to launch its biggest legislative accomplishment on schedule." Sarah Kliff in The Washington Post.
Roundup: What all of the stakeholders have to say on the employer-mandate delay. Phil Galewitz in Kaiser Health News.
Jarrett: 'Full steam ahead' for ObamaCare marketplaces, despite business delay. ""We are full steam ahead for the Marketplaces opening on October 1," Jarrett said in a blog post explaining the move on the White House website. The marketplaces will allow small businesses to shop online for health coverage for their employees from private health insurance providers whose coverage meets basic guidelines." Justin Sink in The Hill.
GOP gloats over Obamacare delay. "As the Obama administration announced a one-year delay in the employer mandate, leading Republican lawmakers and political strategists painted the decision as an admission of the law’s failures – and a blatant attempt to shield Democrats during the 2014 elections...Meanwhile, the chairman of the powerful House Committee on Oversight and Government reform questioned whether the White House even has the legal authority to put off the penalty." Jason Millman in Politico.
KLEIN: Obamacare’s employer mandate shouldn’t be delayed. It should be repealed. "Delaying Obamacare’s employer mandate is the right thing to do. Frankly, eliminating it — or at least utterly overhauling it — is probably the right thing to do. But the administration executing a regulatory end-run around Congress is not the right way to do it...By tying the penalties to how many full-time workers an employer has, and how many of them qualify for subsidies, the mandate gives employers a reason to have fewer full-time workers, and fewer low-income workers." Ezra Klein in The Washington Post.
SOLTAS: The side effects of delaying the employer mandate. "[T]here is a strong case for getting rid of the employer mandate...[but] the value of the employer mandate is to help smooth the transition to the new law. Employers who would have otherwise covered their employees may now choose to defer those plans a year. That may be especially appealing with the law’s new and looming standards for what insurance must cover. Since the individual mandate still exists, however, those employees will now be forced into individual exchanges."" Evan Soltas in Bloomberg.
BARRO: Their rationale for the delay is either lame or fake. "If the real reason for the delay is that Treasury couldn't get its act together on the reporting requirements, that is very embarrassing for the Obama Administration...But the reporting issue may just be a pretext for the delay. The employer mandate is a bad policy that will discourage job creation. The Administration may be looking for a way to avoid imposing it ever...Delaying the employer mandate, perhaps indefinitely, is one way to do that. It's a better reason than "we couldn't figure out how to do the reporting." But it's not one you can say out loud." Josh Barro in Business Insider.
COHN: This is real bad news for Obamacare. "One is that the administration was genuinely worried about some employment effects at the margins—not businesses dropping coverage, as many have speculated, but changing their hiring patterns in the future. Another possibility is that, in response to loud complaints from employers about the filing requirements for the mandate, the administration just backed off." Jonathan Cohn in The New Republic.
JOST: Relax, this might not be a big issue. "As a practical matter, most employers subject to the mandate already offer insurance. The mandate only covers employers with more than 50 full-time or full-time-equivalent employees. Ninety-eight percent of employers with more than 200 employees offer health insurance, as do 94 percent of employers with 50 to 199 employees. The vast majority offer insurance that is both affordable and adequate, as those terms are defined in the ACA." Timothy Jost in Health Affairs.
ROY: Far-reaching implications for private insurance. "There’s been a lot of debate as to whether or not Obamacare incentivizes employers to drop coverage for their employees. A 2011 survey of employers by McKinsey & Co. found that 30 percent of employers “definitely or probably” would stop offering coverage after 2014; among those who felt that they had the most knowledge of the law’s inner workings, that number rose to 50 percent. However, the Congressional Budget Office, in a 2012 report, argued that employers do not have a large incentive to dump workers’ coverage." Avik Roy in Forbes.
FLAVELLE: Is Obamacare headed for more trouble? "[I]t's almost inconceivable that business groups will be satisfied with just this change. The National Retail Federation wants the employer mandate to apply only to businesses with 100 or more full-time employees, not 50. By announcing that it's willing to budge on timing, the administration weakens its ability to resist more substantial changes, such as reducing the mandate's scope. This change could make the politics worse, not better...Perhaps the most interesting part of today's news is what it says about the challenges the administration perceives in putting this law into place." Christopher Flavelle in Bloomberg.
PHILIP KLEIN: The precedent matters. "[T]he delay is said to be one year, but if business lobbyists were successful in convincing the Obama administration to delay it for a year, will it actually ever go into effect? Congress routinely votes to delay scheduled cuts in physician payments under Medicare. Will this be the same sort of policy, that exists on paper, but never gets implemented? Politically, the decision smacks of the Obama administration wanting to defer the impact of the law on businesses during the 2014 midterm election year, avoiding headlines about businesses cutting staff levels or reducing worker hours to get around the mandate." Philip Klein in The Washington Examiner.
Music recommendations interlude: Van Halen, "Somebody Get Me a Doctor," 1979.
KLEIN: Chief Justice Roberts has awesome power to decide the surveillance state. "Chief justice of the U.S. is a pretty big job. You lead the Supreme Court conferences where cases are discussed and voted on. You preside over oral arguments. When in the majority, you decide who writes the opinion. You get a cool robe that you can decorate with gold stripes. Oh, and one more thing: You have exclusive, unaccountable, lifetime power to shape the surveillance state...The 11 FISA judges, chosen from throughout the federal bench for seven-year terms, are all appointed by the chief justice. In fact, every FISA judge currently serving was appointed by Chief Justice John Roberts, who will continue making such appointments until he retires or dies. FISA judges don’t need confirmation -- by Congress or anyone else." Ezra Klein in Bloomberg.
MILBANK: Snowden undermines his own cause in the U.S. "At the start, Snowden’s revelations to the Guardian and The Post promised to put him in the distinguished company of Daniel Ellsberg and others who exposed government wrongdoing. But rather than come home and face trial — giving the nation the debate he claimed to seek about assaults on Americans’ privacy — he has allowed the story to become all about his life as a fugitive." Dana Milbank in The Washington Post.
FRIEDMAN: The amazing energy race. "We also have to ensure that cheap natural gas displaces coal but doesn’t also displace energy efficiency and renewables, like solar or wind, so that natural gas becomes a bridge to a clean energy future, not a ditch. It would be ideal to do this through legislation and not E.P.A. fiat, but Republicans have blocked that route, which is pathetic because the best way to do it is with a Republican idea from the last Bush administration: a national clean energy standard for electricity generation — an idea the G.O.P. only began to oppose when Obama said he favored it." Thomas L. Friedman in The New York Times.
SHRANK AND ZARATE: Data mining, without Big Brother. "Given the importance and confidentiality of its data, Swift demanded that the government’s access be targeted and limited, preventing broad data-mining but allowing focused searches and analysis to prevent terrorist attacks. Searches for any other purpose were forbidden. Both the Treasury and Swift ensured that the constraints on the information retrieved and used by analysts were strictly enforced. Outside auditors hired by Swift confirmed the limited scope of use, and Swift’s own representatives (called “scrutineers”) had authority to stop access to the data at any time if there was a concern that the restrictions were being breached." Leonard H. Shrank and Juan C. Zarate in The New York Times.
In memoriam interlude: William Gray, former House majority whip.
2) Getting the House onboard for immigration
How to sell the House on immigration reform. "Advocates will encourage House members who can set the tone for others on immigration to speak out. Reform-backers believe Rep. Paul Ryan (R-Wis.) is key to that effort. The party's vice presidential nominee in 2012 has voiced support for overhauling the nation's immigration laws and commands respect among all House Republican factions." Jordan Fabian and Ted Hesson in ABC News.
SEIU, advocacy groups pressure House on immigration. "A broad coalition of advocacy groups is launching a multipronged campaign aimed at pressuring the Republican-led House to pass comprehensive immigration reform before the August recess...The Center for Community Change is focusing on seven House GOP leaders or committee heads and four House Republicans in potential swing districts with a prominent Latino population, said Deepak Bhargava, the group’s executive director." Seung Min Kim in Politico.
Immigration and Social Security. "The Social Security Administration’s chief actuary, Stephen C. Goss, says he believes that even 75 years out, there will be a net gain from immigrants, as he wrote in May. That is because their withdrawals will be offset by their children’s contributions...Economists who have studied the issue tend to agree that more immigration is better, but that the effect is small." Shaila Dewan in The New York Times.
Ad absurdum interlude: Now here are some small-plate dishes.
3) Regulators aim is on the money
Federal Reserve Board approves rules requiring banks to set aside more capital. "The Federal Reserve Board on Tuesday ordered banks to set aside more capital as a cushion against losses, bringing the United States in line with developing international standards and opening the door for a set of tougher rules for the nations biggest financial institutions. Almost all banks already meet the requirements the board unanimously approved Tuesday, but the new capital rules are only the beginning. Fed governor Dan Tarullo said the board plans to issue four proposals in the coming months to ratchet standards up even higher for banks deemed “systemically important,” including JPMorgan Chase and Goldman Sachs." Danielle Douglas in The Washington Post.
Explainer: These seven charts show where the U.S. economy is headed next. Neil Irwin in The Washington Post.
Dodd-Frank is 3. So why isn’t it ready yet? "Davis Polk, a law firm that tracks rulemaking mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act, is out with its latest progress report, and the results sound pretty dismal. About 70 percent of the 398 deadlines have passed, and out of those, 62.7 percent have been missed. So as the law’s third anniversary approaches, less than half of it has been actually implemented. Should you be outraged? Well, the numbers are a little misleading. In its rush to fix the market mess in 2010, Congress imposed an extremely ambitious timeline for writing hundreds of rules, many of which were due within a year." Lydia DePillis in The Washington Post.
More important finance news: Pimco bond fund sees record outflows. "Investors yanked nearly $10 billion in June out of Pacific Investment Management Co.'s $268 billion Total Return Bond Fund run by Mr. Gross, according to fund tracker Morningstar. It was the biggest outflow from the world's biggest bond fund since Morningstar started tracking the fund's flow in 1993...Fears that the Federal Reserve may soon pull back on its bond-buying program sparked a broad selloff in global financial markets—from Treasury bonds, mortgage-backed securities and corporate bonds to stocks and emerging-market assets." Min Zeng in The Wall Street Journal.
U.S. factory orders suggest manufacturing is improving. "The Commerce Department said on Tuesday that factory orders rose 2.1 percent in May. April’s increase was revised higher, to 1.3 percent from 1 percent...A category of orders that is viewed as a proxy for business investment plans — which excludes the volatile areas of transportation and defense — rose 1.5 percent." The Associated Press.
...And American autos are selling like hot cakes. "U.S. auto sales rose at the strongest rate in more than five years in June, propelled by a surge in pickup truck demand, lending new confidence to industry executives' belief that the nation's auto recovery has more room to run. Overall, auto makers sold 1.4 million cars and light trucks in June, 9.2% more than a year ago, according to researcher Autodata Corp., and putting the industry on track to make 2013 its best sales year since 2007. Through the first six months of the year, Americans have purchased 7.8 million cars, 7.7% more than the same period a year ago." Neal E. Boudette and Jeff Bennett in The Wall Street Journal.
The surprising reason we need more women in the global workforce. "Could getting more women in the workforce be the key to a stronger and more stable global economy? Some leading thinkers, including at the International Monetary Fund, argue exactly that. “Growth is the lens through which we view the issue of female labor force participation, as women can make a critical contribution to it,” IMF deputy managing director Nemat Shafik said at an event last week focusing on “Women as a Driver for Economic Growth” at the Peterson Institute for International Economics in Washington." Katerina Sokou in The Washington Post.
Linguistic interlude: The weirdest languages.
4) Snowden's struggle
Options narrow for Snowden as asylum bids fall short. "National Security Agency leaker Edward Snowden's options narrowed Tuesday as his globe-spanning, 21-country plea for asylum largely came up short, raising the possibility of a prolonged stay in the transit zone of Moscow's Sheremetyevo Airport...Mr. Snowden's remaining hopes seemed to lie with firebrand anti-American leaders in Venezuela and Bolivia, with Ecuador starting to hedge." Paul Stone and Peter Nicholas in The Wall Street Journal.
Two longreads for you: "How the NSA Targets Germany and Europe," by Laura Poitras, Marcel Rosenbach, Fidelius Schmid, Holger Stark and Jonathan Stock in Der Spiegel. "How Glenn Greenwald Became Glenn Greenwald," by Jessica Testa in BuzzFeed.
Snowden’s father signals frustration with WikiLeaks, issues broad defense of son. "Lonnie Snowden issued a broad defense of his son, a former National Security Agency contractor who has admitted leaking information about secret surveillance programs. In an open letter released Tuesday, the elder Snowden, a retired U.S. Coast Guard officer, praised his son as “a modern day Paul Revere summoning the American people to confront the growing danger of tyranny and one branch government.” “What you have done and are doing has awakened congressional oversight of the intelligence community from deep slumber,” said the letter, co-written with Fein." Jerry Markon in The Washington Post.
NSA wants hackers. "Faced with accelerating technological advances over the past decade, and pressed to outsource vital government services, U.S. spy agencies are reaching ever further outside the traditional government hierarchy for expertise. That approach likely led them to Mr. Snowden." Elizabeth Williamson in The Wall Street Journal.
Easter eggs interlude: At 2:58 in "Hey Jude," Paul McCartney swears, and they never edited it out.
5) Federal abortion ban floated
Rubio will seek federal ban on abortion after 20 weeks. "With Rubio’s presence, the bill is certain to gain enormous media attention and thus more national visibility for the issue of limiting late term abortions. Right-to-life groups have urged Rubio to take the lead on the issue, believing he would be the strongest possible advocate in the Senate. Several sources confirmed he’d agreed." Fred Barnes in The Weekly Standard.
...That should change Republican silence so far. "The RNC hasn’t latched onto the fight. Few national Republicans have weighed in. And a key party official in Texas acknowledged there’s no behind-the-scenes help coming, though he says he doesn’t need it. Republicans will talk about the abortion bill when they’re asked about it, but they aren’t swooping into the fight with the same enthusiasm as liberals...The political reality is that abortion is a dangerous debate to have on the national stage, even for a short period of time." David Nather in Politico.
Explainer: Abortion restrictions in Europe. BBC.
What does the public think of such measures? "A United Technologies/National Journal Congressional Connection poll released last Wednesday found the public almost evenly split on a 20-week ban: 48 percent of respondents said they would support legislation that banned “virtually all abortions nationwide after 20 weeks of pregnancy, except in cases of rape and incest that are reported to authorities.” Forty-four percent would oppose such a bill." Micah Cohen in The New York Times.
Survey: Half of docs aren’t discussing ObamaCare with patients. "ObamaCare isn't a consistent topic of discussion between doctors and patients, even as the law's major provisions are set to take effect, according to a new consumer survey. Half of patients with a regular doctor haven't heard him or her talk about healthcare reform at appointments, according to HealthPocket, a consumer resource on health insurance...According to HealthPocket, 38 percent of patients heard mostly negative things about the law, while 33 percent heard mostly positive things. Twenty-nine percent reported that their doctors' comments had been neutral." Elise Viebeck in The Hill.
Long-term-care insurance gap hits seniors. "The long-term-insurance industry now is shrinking, premiums are soaring and there is no fix in sight. At the same time, government safety-net programs, already under cost-cutting pressure, are bracing for demand from more of the 77 million aging baby boomers...Insurers have been aware of this gap for decades, and many began selling long-term-care policies in the 1980s and 1990s. They vowed to provide policyholders with better access to high-quality nursing homes and home-based health care than Medicaid. But insurers underestimated how fast medical costs would rise, and how many seniors would actually use the benefits. And they underpriced the insurance premiums." Kelly Greene and Leslie Scism in The Wall Street Journal.
One area of health care spending that's not exploding: mental care. "Mental health spending, both public and private, was about $150 billion in 2009, more than double its level in inflation-adjusted terms in 1986, according to a recent article in Health Affairs. But the overall economy also about doubled during that time. As a result, direct mental health spending has remained roughly 1 percent of the economy since 1986, while total health spending climbed from about 10 percent of gross domestic product in 1986 to nearly 17 percent in 2009." Catherine Rampell in The New York Times.
Reading material interlude: The best sentences Wonkblog read today.
How RSS feeds lost the web. Lydia DePillis.
Dodd-Frank is 3. So why isn’t it ready yet? Lydia DePillis.
The surprising reason we need more women in the global workforce. Katerina Sokou.
These tech companies are spending millions on high-priced lobbyists. Timothy B. Lee.
The politics of delaying Obamacare. Sarah Kliff.
Six reasons why tax reform won’t happen. Lydia DePillis.
Interview: The protests in Turkey, Brazil and Egypt shouldn’t surprise you, says Ruchir Sharma. Ezra Klein.
Oregon explores novel way to fund college. Douglas Belkin in The Wall Street Journal.
Ruling on same-sex marriage may help sort out the issue of divorces. Erica Goode in The New York Times.
Winklevoss twins make the best case against their own Bitcoin fund. Evan Soltas in Bloomberg.
Sequestration hurts the long-term unemployed. Catherine Rampell in The New York Times.
Wonkbook is produced with help from Michelle Williams.