Daily Dispatches
Congressional Budget Office Director Doug Elmendorf
Associated Press/Photo by J. Scott Applewhite
Congressional Budget Office Director Doug Elmendorf

CBO: Employer mandate delay cost government $10 billion


The government was counting on businesses to shirk the Affordable Care Act (ACA) to help decrease the deficit. But President Barack Obama decided not to enforce the employer insurance mandate until 2015. Now the government is out $10 billion.

The Congressional Budget Office (CBO) released the estimate July 30 in response to the Obama administration’s recent rule changes for the employer mandate and applicant verification bottlenecks. Revising its May report, the new document says Obamacare will generate $12 billion in new costs. Most of the cost—$10 billion—comes because the IRS can’t collect penalties from businesses that don’t provide “affordable” insurance until 2015. CBO Director Douglas Elmendorf, a 2009 appointee of then-House Speaker and Obamacare champion Nancy Pelosi, signed the report.

The $10 billion in lost penalties comes as White House pundits claim the employer mandate only affects 0.2 percent of American businesses. Those are the 10,000 business with more than 50 employees that don’t currently provide health insurance to full-time employees, they say.

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In reality, every business that provides insurance faces penalties, even if they offer insurance. Businesses must subsidize employees’ insurance so it costs no more than 9.5 percent of their salaries. If not, that business pays a $3,000 penalty for each employee who buys insurance from a federal- or state-run exchange. But employees may choose to move to an exchange because it’s cheaper. When a family of four making $88,200 could get Medicaid to subsidize 70 percent of its costs, an exchange plan is a financial no-brainer that leaves employers holding the bag on penalties.

And the exchanges are where the rest of the $12 billion comes in. As part of massive verification bottlenecks, state exchanges will have the option not to verify a person’s self-reported income and “accept the attestation as final.” Essentially, the CBO expects fraud, saying the “verification process will have significant effects on people’s behavior.” Enough failsafes exist, they say, that the impact will only be about $3 billion over 10 years. After subtracting an additional $1 billion for  an increase in taxable income, the CBO arrived at the $12 billion in new costs costs.

Looming mandates continue to create headaches for businesses and already low-income employees. Many businesses, especially restaurants, have reported plans to cut employee hours below the 30-hour threshold. There’s also the contraceptive mandate: Not providing abortion-inducing contraceptives carries a much higher fine than not providing insurance at all.

The CBO now says 1 million people will lose their employee-provided insurance next year, thanks to Obamacare requirements. That decreases the number of the newly insured under the Affordable Care Act to 13 million.

Andrew Branch
Andrew Branch

Andrew is a freelance writer living in Raleigh, N.C. He was homeschooled for 12 years and recently graduated from N.C. State University. He writes about sports and poverty for WORLD. Follow Andrew on Twitter @AndrewABranch.


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