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RAND: One Year Delay in Employer Mandate Is Manageable but Repeal Would be Very Costly

The RAND Corporation is out with a new study looking at what impact President Obama’s decision to delay the employer mandate for a year will have. Their results find the impact in 2014 will be manageable as long as it is truly just for one year.

According to RAND, this delay will only result in 300,000 fewer people having employer-sponsored health insurance in 2014 and the government losing roughly $11 billion.

Their estimate is slightly better than the Congressional Budget Office’s (CBO). The CBO concluded the delay would result in roughly one million fewer people enrolled in employer-sponsored health insurance and on net this move would cost the government $12 billion.

While the one year delay is manageable RAND found a permanent delay or full repeal would be extremely costly. Over the next decade a full repeal would eliminate roughly $149 billion in revenue expected from the penalty, which is roughly 10 percent total spending offsets used to pay for the law.

If the Obama administration issued this delay to simply give companies a little bit of extra time or to push minor complications beyond the 2014 election, it will be a pricey hiccup. On the other hand, if the administration delayed it because the incredibly stupid design of this provision makes it unworkable, then we would have a serious policy problem.

For political reasons Democrats refused to adopt a true employer mandate, which would have been simpler to implement. Instead they wrote a needlessly complex “free rider” provision, which creates terrible incentives and potential for problematic gaming.

Photo by Kreg Steppe under Creative Commons license

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Jon Walker

Jon Walker

Jonathan Walker grew up in New Jersey. He graduated from Wesleyan University in 2006. He is an expert on politics, health care and drug policy. He is also the author of After Legalization and Cobalt Slave, and a Futurist writer at