Both the working poor and small businesses got some welcome, albeit temporary, news yesterday: the Treasury Department announced it is delaying what’s called the “employer mandate” under the Affordable Care Act until January of 2015.
That mandate requires companies with more than 50 full-time employees to offer health insurance or pay a $2,000 penalty. Most businesses with more than 50 employees already offer insurance, but smaller companies and startups often cannot afford the cost.
Even some supporters of Obamacare admit this mandate was a bad idea. As the Washington Post‘s Ezra Klein says, “it creates an incentive against hiring more full-time workers, and for cutting the hours of some of the full-time workers you already have. This was obvious from the day it was introduced.”
Many businesses had explained to the Obama administration that the mandate would increase the incremental cost of labor, resulting in companies hiring fewer less-skilled, low-wage workers and ensuring that those that are hired are only part-time. As I wrote last month, this is not an ideal means of helping the working poor. But this is a prime example of the unintended consequences that occur when technocrats attempt to “solve” problems that are best handled through the free-market.
The technocrats probably haven’t learned their lesson, though. President Obama’s senior adviser Valerie Jarrett wrote in a blog post that the move shows the White House is “listening” to make sure they “get this right.” Jarrett doesn’t explain why the White House didn’t listen to those who told them this was a problem from the start. Nor does she say why they couldn’t “get it right” when the legislation was being crafted.
Still, there is some hope this temporary delay of the job-killing mandate will become permanent. As Klein says, “The White House swears this is a one-year delay to streamline the reporting requirements. But business lobbyists will no doubt work to make it an endless delay.” For the sake of America’s poor, let’s hope he’s right.
