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Obama Makes Wise Choice to Delay Insurance Mandate

Author: Peter R. Orszag, Adjunct Senior Fellow
July 4, 2013
Bloomberg.com

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The Barack Obama administration should be commended for delaying implementation of the employer mandate under the Affordable Care Act. The delay won't do much damage -- other than perhaps symbolically -- to the effort to expand insurance coverage, and it allows the administration to focus on more pressing issues in carrying out the law.

The delay was front-page news across the country. But what are the actual effects? The mandate requires companies with 50 or more employees to provide health insurance or to pay a $2,000 to $3,000 penalty for each worker who gets subsidized individual coverage through the public exchanges created by the legislation. The administration's announcement means that no company will face this penalty until 2015.

The penalty is far from perfect. At the margin, for example, it has the effect of discouraging employment of low-and moderate-wage workers -- the ones who could get subsidized coverage through the exchanges -- relative to high-wage workers. But what impact will delaying it by one year have on coverage?

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