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Wednesday, August 7, 2013

The Unanticipated Consequences of Postponing the Employer Mandate

Today's post was shared by NEJM and comes from

Interview with Prof. Mark Pauly on the consequences of postponing the ACA's employer mandate.

The Obama administration's decision to postpone implementation of the employer mandate is the latest in a series of delays and alterations of the Affordable Care Act (ACA). But postponing the mandate — which requires larger employers to offer lower-income workers health insurance coverage similar to that available in the new insurance exchanges, on equal and affordable financial terms — may create large ripple effects. The good news is that as compared with instituting the mandate as planned, postponing it should barely increase the number of uninsured Americans after ACA implementation. But it affects other provisions, particularly the individual subsidies for purchasing insurance, and creates distorted incentives that may leave the government paying significantly more than planned.

More than 90% of Americans who obtain private health insurance today receive it through employers, but the centerpiece of the ACA's effort to make coverage more attractive to the uninsured focuses on insurance exchanges for individuals purchasing coverage directly. However, because both consumers and employers can in principle finance or obtain private health insurance in either setting, ACA provisions had to be compatible with both coverage channels. Moreover, the legislation created tax-financed subsidies for buying insurance only through the exchanges while relying largely on regulations and mandates to deal with employment-based coverage. Inevitably, this grafting of a new...

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