Says Obama administration delay of health care law's employer mandate affects about 1 percent of the American workforce.
Robert Menendez on Sunday, July 7th, 2013 in an interview on NBC’s “Meet the Press”
Sen. Robert Menendez says Obamacare’s employer mandate affects 1% of U.S. workforce
Just how many workers does the health care law’s employer mandate affect, anyway?
The Obama administration’s holiday-week announcement that it would delay requiring large employers to provide full-time employees with affordable coverage inflamed opponents of the law. (And dismayed some supporters, who questioned whether the president had that authority.)
Take Sen. Robert Menendez, D-N.J., on NBC’s Meet the Press on July 7:
"96 percent of all companies in America weren't subject to the mandate because they're under 50 employees. Those who are subject to the mandate, 95 percent of them already offer insurance so, we're talking about probably 1 percent of the American workforce that works for a company subject to the mandate that didn't get insurance and will be able to get it in the health exchanges that open up in October."
Are we talking about just 1 percent of the American workforce?
We asked Menendez’s office for evidence for his claim.
It turns out that "1 percent of the American workforce" is a ballpark calculation based on survey research on the number of employees who work for large firms that don’t offer insurance.
Several prominent health economists we spoke with think that’s a pretty reasonable way to estimate it. But some others think it may understate the reach of the mandate by millions.
But no one’s sure just how many million. Let us explain.
Here’s how the mandate works: Starting in 2014 — now 2015 — employers with more than 50 full-time equivalent employees must offer affordable health coverage. If they don’t offer coverage, or offer coverage that’s too limited or too expensive, they’ll likely end up on the hook for penalties (the government’s calling them "shared responsibility payments") of about $2,000 per full-time employee, excluding the first 30.
For the visual learners among you, the independent nonprofit Kaiser Family Foundation summarized the mandate in this nifty infographic.
The employer mandate’s supposed to work hand-in-hand with the individual mandate that everybody — with a few exceptions — carry health insurance or pay a tax penalty. If employers don’t offer coverage, their workers may seek it out on new insurance exchanges, where they may be eligible for tax credits.
The employer penalties are designed to discourage dumping employees onto the exchanges, where they may drive up the cost of government subsidies. Or, barring that, to offset the cost of those subsidies. (The nonpartisan Congressional Budget Office estimated in May, before the delay, that the penalties would be worth $10 billion in 2015.)
But Menendez argued on Meet the Press that because the mandate applies only to larger companies, most of whom already offer insurance, the number of workers who would have been affected just isn’t all that big. More specifically: about 1 percent of the American workforce.
Let’s talk about that calculation for a second.
The size of the U.S. labor force, according to the government, is about 156 million.
Menendez’s sources estimated the mandate only affects about 1 million or 1.5 million workers — about 1 percent of 156 million.
They focused only on the likely number of employees who work for the 5 percent of large firms that don’t offer insurance, based on a widely respected employer survey by the Kaiser Family Foundation.
We know because we talked to them: Zeke Emanuel, a bioethicist, and Mark Duggan, a health economist, both scholars at the University of Pennsylvania who have advised the Obama administration. (Emanuel also happens to be the brother of Rahm, the president’s former chief of staff, now mayor of Chicago.)
It’s hard to estimate exactly, Duggan said, but if the perhaps 10,000 to 12,000 companies that don’t offer insurance each have about 80 to 100 employees — there you go. It’s in the range of Menendez’s 1 percent.
It’s reasonable to assume that most of the companies with more than 50 employees that don’t offer insurance are on the small side, they say, because the Kaiser research shows the larger the size of the firm, the more likely it is to offer insurance.
Kaiser itself concludes that in 2012, 95 percent of employers with at least 50 workers offered insurance — and among firms of that size, 98 percent of employees worked for a company that offered coverage to at least some of its workers.
Here’s the criticism: What about the uninsured workers who work for companies that offer insurance?
Duggan and Emanuel (and others, including Romneycare/Obamacare architect Jonathan Gruber at MIT) say most of those folks wouldn’t trigger the mandate, anyway: They’re part-time or temporary workers that companies won’t be required to insure.
Other health economists we spoke with said: Not so fast. How do you know?
Christopher Conover, who works for the Center for Health Policy and Inequalities Research at Duke University, argues there are millions of uninsured workers who work for companies that offer insurance who may well qualify for employer coverage under Obamacare.
He pointed to a recent example in the New York Times of a restaurant that would likely be subject to the employer mandate. The owner offers health coverage to employees, but only to nine of them. It’s a company, then, that offers insurance — and so wouldn’t be part of Duggan’s ballpark calculation.
But under the employer mandate, the restaurant owner estimates he would need to insure 22 of his 85 employees. Conover argues any estimate of the number of workers affected by the mandate should include workers like the 13 restaurant employees who are right now left out.
They work for a company that offers health insurance, but not to them.
Here’s the thing: Economists disagree about how common that situation really is. Are there a million such workers? Five million? More?
They don’t know.
"It’s a lot more than a million people. It just has to be," said Stephen Parente, a health economist at the University of Minnesota who advised Sen. John McCain’s 2008 presidential campaign.
Still, experts we talked to agreed that the vast majority of the American workforce are not affected.
"I think the bottom line is that it is small," said Gruber of MIT. "Menendez may not be exactly right but he is in the right ballpark."
Menendez said on Meet the Press that "we're talking about probably 1 percent of the American workforce that works for a company subject to the mandate that didn't get insurance." He cited a ballpark estimate by health economists based on the small number of large employers who don’t offer insurance.
Critics of the estimate say that calculation misses uninsured workers for the 95 percent of large employers that do offer insurance. The problem is that no one’s sure how many of those workers would be subject to the mandate — as opposed to part-time or temporary workers who don’t qualify for employer insurance now, and wouldn’t in 2015, either.
But that number, even if it's millions more, remains a small percentage of the U.S. workforce. We rate Menendez's claim Mostly True.