by Mitch Kokai
Senior Political Analyst, John Locke Foundation
Michael Tanner of the libertarian Cato Institute reminds National Review Online readers why it makes sense for Republicans to continue their efforts to repeal as much of the 2010 federal health care reform law as possible.
Speaking at a campaign-style rally last month at an Amazon plant in Chattanooga, Tenn., President Obama ridiculed Republicans’ economic agenda, claiming that “wasting the country’s time by taking something like 40 meaningless votes to repeal Obamacare is not a jobs plan.”
The president has a bit of a point about the futility of those 40 votes. Given the unwillingness of the Senate to even consider changes to the health-care law, continued repeal votes are more an exercise in political theater than in policy. However, by that measure, the president’s giving countless speeches calling for higher taxes and more government spending would seem to be equally lacking in substance.
But plenty of those anti-Obamacare efforts — such as the proposal by Senators Ted Cruz and Mike Lee to defund Obamacare — actually would help create jobs, and the president has hardly rushed to embrace them.
On average, it costs an American employer $4,644 to provide health insurance to a worker. For a worker earning the U.S. median annual wage of $40,300, that amounts to an 11.5 percent hike in the cost of employing him. Alternatively, the employer could pay a penalty of $2,000 per worker. That would hike the cost of employing a median-wage worker by only roughly 5 percent, but that money has to come from somewhere, too. (The president recently delayed enforcement of this mandate for a year, but this probably won’t change the decisions of most employers, since they’ll have to come into compliance soon enough anyway.)
While most businesses with 50 or more workers currently provide their workers with insurance, that doesn’t mean that they won’t see their costs pushed up by the mandate. That’s because in order to avoid the penalty, the business must provide insurance that meets the “minimum essential benefits” requirements, which may be more comprehensive and more expensive than what the business provides today. A business’s current insurance plan is “grandfathered” under the Affordable Care Act, but the business must come into full compliance if it makes any adjustment to the plan, such as changing deductibles or benefits. Moreover, noncompliant plans themselves are closed from adding new members (other than new employees at businesses with grandfathered plans). That means over time, most noncompliant plans will become unsustainable, because their insurance pools will shrink. Eventually almost all businesses will be forced to change their insurance to the more expensive Obamacare-compliant plans.