The Magazine

The Soft Underbelly of Obama­care

Aug 12, 2013, Vol. 18, No. 45 • By JAMES C. CAPRETTA and YUVAL LEVIN
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They therefore have to implement the individual mandate as the system gets going next year, even though it is very unpopular. Indeed, the mandate generally ranks as the most unpopular provision of Obamacare. A recent survey found only 12 percent of Americans supported it. That kind of public opposition is why Barack Obama himself expressed opposition to a mandate in the 2008 election—only to reverse himself when it came time to write a bill. It was also why the law’s architects made the mandate so weak. And it is why Republicans have already successfully used it to pressure the Democrats.

Last month, well aware of the mandate’s unpopularity, the House GOP wisely seized on the opening presented by the administration’s one-year delay of the employer mandate to push not only for a genuine statutory delay of the employer mandate but also a corresponding and simultaneous delay of the mandate for individuals. Twenty-two Democrats joined all but one Republican in support of the individual-mandate delay—a hint that at least some modest part of the coalition defending Obamacare could be picked off on this point.

Indeed, when the Obama administration delayed the employer mandate, it made a debate about the individual mandate inevitable and handed the GOP its best opportunity yet to make real headway in repealing the entire law.

On purely political grounds, it is both easy and right for voters to think about the mandates in tandem. The law created new obligations on employers and workers alike. If large employers are going to be given a reprieve, why shouldn’t working families get one too? But beyond the obvious political link, delaying the employer mandate also makes it much more difficult to fairly enforce the individual mandate.

For starters, the administration’s decision gave a reprieve not only to employers but also to insurance companies. They do not have to report who is enrolled in their plans in 2014. Thus, the IRS will have no independent data with which to verify who is covered and who isn’t, by employers or directly by insurers, and will have to rely entirely on self-reporting to determine who should have to pay the tax for being uninsured. This is a recipe for rewarding the dishonest and penalizing the rest.

Further, if employers do not have to offer insurance in 2014 but will have to in 2015, while workers still must get coverage or pay a fine in 2014, workers will face a counterproductive and complicated ping-pong effect. In 2014, the only way for some workers to avoid the uninsured tax would be to get coverage in the Obamacare exchanges. But in 2015, when the employer mandate will supposedly kick in, many of these very same workers will be pushed into accepting what their employers offer and dropping their exchange coverage (as they would no longer qualify for exchange subsidies). This discontinuity in insurance coverage will create needless complexity and problems for many families and their health care providers.

The Obama administration didn’t want to delay the employer mandate—they had to. That mandate could not be implemented in 2014, and it probably cannot ever be implemented without imposing massive costs on employers. Having been delayed once to avoid such consequences, it is hard to see how it could be imposed a year from now—right around the time of a congressional election. The pressure to delay it again will be immense.

Under these circumstances, the potential for delaying the individual mandate is very real, and the pressure to do so will be very difficult for Democrats to resist. Congressional Republicans should use whatever leverage they feel they can responsibly deploy to push for such a delay. The substantive case is compelling. The political argument is overwhelming. And a delay of the individual mandate would make it clear that Obamacare as a whole is far from inevitable and would greatly advance the cause of a broader repeal.

The individual mandate is simultaneously the most vulnerable and most important element of the law. That is the ground that opponents should attack and that Obamacare’s champions must be made to defend.

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