The Ultimate Cost of the Employer Mandate Delay

The report, “Delaying the Employer Mandate: Small Change in the Short Term, Big Cost in the Long Run,” estimated that the one-year delay in enforcement will amount to $11 billion dollars less in revenue for the federal government. This includes $7 billion less in penalties that would be assessed on firms that fail to offer insurance and $4 billion less from fines of employers that offer unaffordable care.

However, a full repeal of the employer mandate would be even worse news for the federal government, causing revenue to fall by $149 billion over the next 10 years (10% of the PPACA’s spending offsets), providing substantially less money to pay for other components of the law.

With regard to insurance coverage, the report findings show that:

• Only 300,000 fewer people, or 0.2% of the population, will have access to affordable insurance in 2014 because of the delay; and
• About 1,000 fewer firms, or 0.02%, will offer coverage in 2014 given the delay.

As for the effect on companies and employees, the report found:

• Only about 0.4% of firms, employing approximately 1.6% of workers, will pay a penalty for not offering health insurance at all; and
• Based on current employer health plan contribution rates, 1.1% of firms will pay some penalty for offering unaffordable coverage to a total of less than 1% of the work force.

In July, the Obama administration announced a one-year delay in enforcement of the PPACA’s penalty on large employers that do not offer affordable health insurance coverage (see “Regulators Delay ACA Employer Reporting, Payment Deadlines”). To help policymakers understand the implications of this decision, RAND analysts employed the COMPARE microsimulation model to gauge the impact of the employer mandate’s one-year delay.

The full report can be downloaded here.