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Yesterday, the Obama administration announced it would delay a part of the Affordable Care Act’s employer mandate, giving companies with more than 50 employees at least another year, and as much as two years, to make sure they cover all of their employees. At a press conference today, reporters asked the President whether the delays mean that the administration “is in part trying to push Americans toward the individual health insurance market and decouple insurance from employment”.
The President denied the allegation. Sarah Kliff writes that “this delay will likely amount to a relatively small, if non-existent, change”.
Ezra Klein and Josh Barro argue that workers are too reliant on their employers for healthcare. “Employers became the main vehicles for insurance not because anyone thought it was a good idea, but because the tax code made it a bargain”, writes Klein. Employers only began offering healthcare benefits to workers during WWII when wage controls didn’t allow them to offer higher salaries. The only thing that has perpetuated the system up to now is fear of change, he says.
The Congressional Budget Office projects that the ACA, through its individual exchanges, will have some effect on the relationship between employment and healthcare. The law won’t kill jobs; rather, it will allow people just working for the benefits to reduce their hours or quit outright. Read their FAQ here. “All of a sudden, employment isn’t such a key ticket to accessing affordable health insurance”, writes Sarah Kliff.
AOL is an example of a company that would likely benefit from insurance-employment decoupling, Ezra Klein writes. CEO Tim Armstrong said last week that the company had chosen to change its 401(k) matching program because healthcare costs had skyrocketed last year due to 1) Obamacare, and 2) two “distressed babies” that had resulted in million-dollar pregnancies. Like many large companies, AOL self-insures, which means its risk pool is much smaller than, say, Medicare, with 49 million beneficiaries. It may also have reinsurance. Armstrong’s comments were not well-chosen, but Klein says AOL’s problems are real, and Obamacare may actually save the company in the long term:
An irony of Armstrong’s predicament is that Obamacare, which he partly blames for his company’s increased costs, might be its salvation. Starting in 2017, states can choose to let large employers enter state health-care exchanges. That means companies would be able to add their employees to a much larger risk pool — in some cases, millions strong.
And that’s good for everyone. — Shane Ferro
On to today’s links:
“The best way to shorten unemployment is to make job-seeking less emotionally painful” – Megan McArdle
Planet Money podcast better at teaching students macro than “boring lectures” – SSRN
Study: “Citigroup was not only TBTF but also too large and too complex to manage or regulate effectively” – SSRN