Senate Push to Repeal Misguided Employer Mandate Begins This Week

One of the very first actions of the new Congress was to chip away at one of the worst elements of Obamacare: the employer mandate.

The president’s health care law mandated businesses with at least 50 full-time employees to provide their workers with insurance that the federal government deems “affordable” or pay a fine of up to $3,000 per employee. The problem was that the law defined a “full-time” worker as one who works at least 30 hours a week, thereby creating incentives for employers to push their workers below the cap.

“One of the worst things we can do is destroy the 40-hour work week, which has been a part of the American culture and life for a very long time,” Senate Majority Leader Mitch McConnell said. The 30-hour idea is “wreaking havoc out in society, regardless of what the congressional budget view may be.”

What does havoc look like? As Andy Puzder, the CEO of CKE Restaurants, writes in the Wall Street Journal, the mandate has done next to nothing to increase the number of insured among his employees. Of his 20,000 employees, 5,453 worked more than 30 hours, were eligible for Obamacare-compliant plans, and didn’t already have a pre-existing company plan, and just 420 of those actually enrolled in an ACA plan. Just 6 percent of eligible employees went through the rigmarole of signing up. Was it worth it? Puzder writes:

For results like that, ObamaCare has caused millions of full-time jobs to become part-time, imposed a tax on lower-income workers who cannot afford it, forced millions of people out of insurance they liked, restricted access to doctors for millions of others, and created an enormous bureaucracy that discourages our doctors and nurses while suppressing health-care system innovation.

People don’t seem to think the trade-off is worth it, as our company’s pathetically low enrollment rate shows.

The headline impact of the employer mandate has always been creating the perverse incentive to cut worker hours, but that’s far from the only problem. It also puts downward pressure on wages because the tax code incentivizes employers to offer robust health benefits rather than robust wages. And the mandate disincentivizes employers from hiring older, or less-healthy workers, since they consume more, and more costly health care.

That view is shared by economists from across the political spectrum. The left-leaning Urban Institute, in a paper called “Why Not Just Eliminate the Employer Mandate?”, wrote that “eliminating the employer mandate will not reduce insurance coverage significantly” and “will remove labor market distortions that have troubled employer groups and which would harm some workers.” The liberal Commonwealth Fund came to similar conclusions, saying in a blog post that the mandate may lead “companies to bring on fewer low-income employees” or “hire fewer workers altogether.”

The House has already voted to dampen the negative impact of the employer mandate by restoring the workweek to 40 hours. In previous congresses the bill would have gone to the Senate where Harry Reid would have sentenced it to a slow death. Now that Republicans have a majority the bill can at least be heard and debated, a process that will begin next week.

Sen. Lamar Alexander, who chairs the Senate Health, Energy, Labor and Pensions (HELP) Committee, announced that he will hold a hearing next week to examine how employers have fared under the Affordable Care Act.

“I intend to hold our first committee hearing on health and labor this Congress to look at how this provision has made it harder for so many Americans to make a living – as we work toward undoing the damage Obamacare has done and preventing future damage from this historic mistake of a law,” Alexander said in a statement.

That’s going to be a long, hard, but necessary process and we can think of no better place to start than with the employer mandate.