Employer Mandate Delay Could Cost Taxpayers Hundreds of Billions of Dollars

So far most of the talk about the employer mandate has been focused on whether the decision is a political winner for Democrats in 2014.

On the one hand, Democrats get to avoid bad election-year headlines that would have come with businesses laying off workers, hiring more part-timers and refusing to grow above the 50-person cap that were predictable side effects of Obamacare. But on the other hand, the news shows that Obama’s signature achievement really is coming apart at the seams. After all, if the bureaucrats in Washington can’t get their act together enough to implement the employer mandate—which is by no means the most operationally challenging provision in the bill—how on earth are they going to implement the rest of it?

Even Democrats are torn about the political impact. The Hill reports:

“’It’s probably better to try to fix the concerns that business, especially, were voicing about this rather than implement it poorly,’ said Democratic strategist Penny Lee, a former top advisor to Senate Majority Leader Harry Reid (D-Nev.)

‘It’s a double-edge sword, though. Pick your poison. There’s no easy answer.”

. . . ‘By delaying it a year, people will see there hasn’t been an entire disruption of the healthcare system,’ she said. ‘Going into the 2014 elections, it will be beneficial to Democrats to have less disruptions to individuals’ lives.’”

What Lee is tacitly admitting is that Obamacare is going to cause serious disruptions in the lives of many Americans. Their health insurance costs are likely going up, they may be forced to change their insurance plan, they may no longer be able to see the same doctor and if you’re a business owner, well, good luck with the paperwork. And that’s if everything goes smoothly, which you know is improbable, if not impossible, based on Washington’s track record.

But while the top-level political component may have garnered the news attention thus far, there is an even more diabolically brilliant policy strategy at work. Avik Roy writes for Forbes:

“The goal here is plain as day. The Obama administration is laser-focused on making sure that enough Americans enroll onto Obamacare-subsidized health insurance platforms, because if they do, it will be politically impossible for Republicans to repeal Obamacare in the future.

Politics ain’t beanbag, they say. But deliberately encouraging tens of billions of dollars of waste, fraud and abuse in order to achieve a political objective is profoundly immoral. It’s a breach of faith with the hard-working taxpayers whose paychecks are being harnessed to a cause many of them don’t support.”

At this point let’s back up a little bit and explain what Roy is talking about. President Obama made the executive decision to delay the employer mandate, which will stop businesses with more than 50 employees from being forced to provide health coverage for their employees. But the impact of the delay go far deeper because eligibility for Obamacare subsidies (money the government gives employees to help purchase an insurance plan in the exchange) are determined based on whether your employer has offered “affordable” coverage. If the federal government is delaying the employer mandate, along with the attendant reporting requirements, there is no longer a way to determine eligibility.

Actually, there’s a way. It just so happens to be a terrible, no good, very bad way. The Wall Street Journal reports:

“HHS now says it will no longer attempt to verify individual eligibility for insurance subsidies and instead will rely on self-reporting, with minimal efforts to verify if the information consumers provide is accurate.

. . . HHS calls this “a slight technical correction” though it is much more than that. The exchanges will not only start dispensing benefits “based on an applicant’s attestation” about his employment insurance status. HHS is also handing the exchanges “temporarily expanded discretion to accept an attestation of projected annual household income without further verification.”

In other words, potentially hundreds of billions of taxpayer dollars could be handed out in health insurance subsidies based on the honor system. And it’s arguably being done solely to create a constituency who will fight any attempt to repeal the law. It’s bribery plain and simple. And it’s wrong.