In a curious action, the Obama Administration recently announced that it is waiting until 2015 to enforce the employer mandate provision of the Affordable Care Act (ACA). This requires employers to provide health insurance for employees if they have over 50. This mandate was initially set to be implemented in 2014. The reasons stated for the delay is to provide time to simplify the reporting requirements and to adapt health coverage and reporting systems. However, there may be another reason for this that no supporter of the ACA would ever admit to.
Even the most casual student of economics can realize that forcing employers to provide health coverage if they have over a certain number of employees creates an incentive for them to have one less employee than that number.
Clearly, this limits the desire of entrepreneurs to expand and increase employment, and it provides an overall stunt in growth. It also greatly increases the incentive for employers to shift employees to being part time rather than full time in order to avoid the employer mandate. Such effects have arguably already begun happening.
At a time when unemployment is decreasing at a very slow rate and the economy is relatively stagnant, the employer mandate could cause for a reversal in employment numbers that would tarnish Obama’s already questionable legacy.
By delaying the implementation of this provision, the Obama Administration could be hoping to delay the development of these negative unintended consequences until after he is on his way out of office. However, this would require the realization of basic economics by those in government, which is something that is all too rare, if not nonexistent.
This also isn’t the only action associated with the ACA that delays the inevitable harm of the legislation.
In California, costs are set to be lower than initially expected in 2014, something that goes against the predictions of many opponents of the ACA. This is good news for supporters and a trump card over its dissenters right? The truth is that another gimmick is being used to delay the eventual skyrocketing of healthcare costs, as Robert Wenzel has pointed out.
The reality of California is that the government is subsidizing health insurance companies by reimbursing whatever money they lose because of keeping their prices artificially low. This creates the illusion that the ACA is decreasing costs in California. However, once these subsidies end in 2016 costs will probably skyrocket as they likely would now if there were no subsidies. Fortunately for Obama, by the time this increase comes to fruition he will likely be out of office and the blame can be put on whoever succeeds him.
While many negative effects of the ACA have already been seen, the Obama Administration has been taking whatever steps it can to conceal them. Unfortunately for Obama, and more importantly for the people of the United States, any action can only delay the ultimate failure and disastrous outcome of a complete implementation of the ACA.Published in