Individual mandate more critical to coverage than employer mandate
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* Kim Krisberg

The decision to delay the Affordable Care Act’s requirement that large employers offer coverage to employees will have virtually no effect on overall health insurance coverage, finds a recent report from the Urban Institute.

The July report compared full implementation of the health reform law against the effect of delaying financial penalties for large employers who choose not to provide coverage to full-time employees. Researchers found that with full implementation, the rate of uninsured Americans drops from 19.2 percent to 10.1 percent; however, without the employer mandate, also called the employer-shared responsibility provision, the uninsured rate still drops to 10.2 percent. On the other hand, the U.S. uninsured rate would fall to only 15.1 percent if the law’s requirement that individuals purchase insurance were eliminated. In other words, the absence of the minimum coverage provision, also known as the individual mandate, would result in about 14 million more people going without health coverage.

![Figure1](http://www.thenationshealth.org/https://www.thenationshealth.org/content/nathealth/43/7/6.2/F1.medium.gif)

[Figure1](http://www.thenationshealth.org/content/43/7/6.2/F1)

Large employers will have an additional year to provide their workers with health insurance, but a recent report said the impact on overall coverage rates will be negligible.

Photo iStockphoto

In early July, the U.S. Department of Treasury announced a one-year delay before the law’s employer penalties and insurance reporting requirements kick in.

Under the law, employers with at least 50 full-time staff were originally required to offer health benefits or face financial penalties as of 2014. In announcing the year-long delay, Mark Mazur, PhD, assistant secretary for tax policy at the Treasury Department, said it will allow the agency to simplify insurance reporting requirements and better adapt health insurance and reporting systems.

“Eliminating the employer mandate has very little effect on the distribution of coverage; it remains virtually identical to the case when the full ACA is in effect,” stated the Urban Institute report. “In particular, there is no large movement from employer-based coverage to the nongroup exchanges. Most employers offer coverage today, when they face no penalty, and they will, by and large, continue to do so under the ACA.”

The report also found that delaying the employer mandate will have virtually no effect on government spending on health insurance subsidies or Medicaid. But the federal government will lose out on $3.7 billion in revenue it would have collected via employer penalties. However, spending would significantly change without the individual mandate.

For example, Medicaid spending would decline as fewer people would be compelled to seek out eligibility, and small businesses would be less likely to offer coverage, which would lower federal spending on small business subsidies. Also, the government would forgo about $3.5 billion in individual mandate penalties.

The ripple effects of the change are still murky. A July analysis from the Congressional Budget Office found that because of the delay, 1 million fewer people will have employer-based coverage in 2014 than initially estimated. In contrast to the Urban Institute’s estimates, the office said the U.S. will lose out on $10 billion in penalty payments.

For a full copy of the report, “It’s No Contest: The ACA’s Employer Mandate Has Far Less Effect on Coverage and Costs than the Individual Mandate,” visit [www.urban.org](http://www.urban.org).

*   Copyright The Nation’s Health, American Public Health Association