Delaying the Affordable Care Act's employer mandate by one year will not pose major consequences for the law's overall implementation, but a repeal of the requirement could pose a major financial setback for the federal government, according to a RAND Corporation analysis released Monday, The Hill's "RegWatch" reports (Hattem, "RegWatch," The Hill, 8/19).
For the study, researchers used an updated version of RAND's COMPARE microsimulation, which predicts the effects of health policy changes at state and national levels (HealthCanal, 8/19).
Background on Delay
Under the requirement, employers with at least 50 full-time workers must provide affordable health coverage or face a $2,000 fine per worker after the first 30 employees. In separate announcements posted July 2 on the White House blog and Treasury Department's blog, officials said the employer coverage mandate will be delayed until 2015 to provide businesses with more time to comply with its reporting requirements (California Healthline, 7/3).
Findings of RAND Report
The RAND analysis found that the one-year delay would mean that about 300,000 U.S. residents who would have received employer-sponsored coverage in 2014 would be without it for the year. That figure is significantly lower than the findings of a Congressional Budget Office analysis of the delay, which predicted that about one million fewer U.S. residents would have employer-sponsored coverage in 2014 ("RegWatch," The Hill, 8/19).
The CBO analysis also found that it would cost the federal government about $12 billion in lost tax revenue and other costs over the next 10 years. The bulk of the lost revenue -- about $10 billion -- would comprise of penalties that some employers would have had to pay for violating the mandate, which would have been assessed in 2014 and collected in 2015 (California Healthline, 7/31). To that effect, RAND analysts said the government would collect about $11 billion less in penalties as a result of the one-year delay, HealthCanal reports.
In addition, the RAND report said that about 1,000 fewer companies -- or less than one percent of large employers -- will offer health insurance in 2014 because of the mandate delay. Once the requirement is implemented in 2015, about 0.4% of large employers are expected to pay the penalty for failing to provide coverage. Similarly, about 1.1% of large employers will be penalized for offering unaffordable coverage (HealthCanal, 8/19).
The report also noted that a full repeal of the mandate -- which some lawmakers and business groups have called for -- would cost the government $149 billion in lost revenue over 10 years that would have come from penalties associated with the requirement ("RegWatch," The Hill, 8/19).