Only 5% of Employers Affected?

Congressman Chris Van Hollen (D-MD) said on Fox News Sunday (September 15th) that the delay in the employer mandate is no big deal, since only five percent of employers would be affected by it. I’ve heard this argument from a large number of ObamaCare supporters now, so it must be part of the talking points circulating among Democrats. It raises two possibilities –

  1. Mr. Van Hollen is perfectly willing to lie to score political points, which is scary, or
  2. He thinks it is a true statement, which is scarier still.

Now, like most misstatements there may be a grain of truth here. The best source of information about employer health benefits is the annual Kaiser Family Foundation/Health Research and Educational Trust survey.

The 2013 survey finds that –

99% of large firms (200 or more workers) offer health benefits to at least some of their workers. In contrast, only 57% of small firms (3­199 workers) offer health benefits in 2013.

So, given the ObamaCare exemption of firms with fewer than fifty employees, and the vast majority of large firms offering (some) coverage to (some) employees, it is plausible that only five percent of firms that don’t currently offer any coverage at all, will be required to provide it in the future.

But that barely scratches the surface.

While overall 57% of all companies offer health insurance, the percentage varies dramatically by industry. The industries that are lower than the average include Wholesale (54%), Finance (49%), Retail (29%), and perhaps surprisingly, Health Care (51%). So the impact of the employer mandate will vary dramatically by industry. 100% of state and local government employers offer coverage.

More importantly, even in the 99% of large companies that offer coverage, only 61% of workers are actually covered. Why? The companies likely don’t offer coverage to part-time or temporary workers, they probably require a certain amount of time on the job (like three to six months) before the employee becomes eligible, and large numbers of workers don’t sign up for coverage even when they are eligible.

ObamaCare will change most of this. Not so much for part-timers, but certainly for temporary workers and new hires (they must all be covered after 30 days), and certainly for many of those who don’t currently take-up the coverage. Employers will be required to actually provide, not just “offer” health benefits and that will raise their costs of employment substantially.

That means, Congressman Van Hollen’s spin notwithstanding, virtually all employers with over 50 employees will be profoundly affected by the employer mandate — even the 100% of state and local governments that currently “offer” health benefits to some of their workers.

Comments (13)

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  1. Billy says:

    “…the delay in the employer mandate is no big deal, since only five percent of employers would be affected by it.”

    Their own propaganda hurts them here with how hard they have pushed to try and tell us how seeping, inclusionary, and effective this is for all Americans. Considering how most people believe the law will affect them and their employer, I doubt many people are willing to believe that only their boss is part of the 5%.

  2. Jackson says:

    The ability of congressmen to rationalize anything and everything is truly remarkable. It was apparently necessary that they pass the employer mandate, but then they turn around and say very few people will actually be affected by it.

    • Stewart T. says:

      Only conservatives don’t care about the minority of the people. We care about everyone and aren’t just willing to shrug and say “Well, it’s up to the market…”

      • Adam says:

        It doesn’t make sense to uproot the whole system for it though. Far better to be a virtuous population that practices charity in excess of the law than to be a vicious population that practices cruelty in restraint by the law.

      • Frank Timmins says:

        “We care about everyone” Who is “We” Stewart?

  3. Adam says:

    People (economists in particular) love to view the market and employers as one big group when it suits them and as separate industries when it doesn’t. The separate view makes impact predictions much harder to make as frequently some industries are helped, some are unaffected, and some are hurt, which doesn’t work well as a soundbite.

  4. Tom G. says:

    “Employers will be required to actually provide, not just “offer” health benefits and that will raise their costs of employment substantially.”

    Which means that most will make the economic decision of having less employment, or at the least, less employment that requires these benefits.

  5. William says:

    Congressman Van Hollen can lie and bend the truth as much as he want though because most people don’t ever believe their own congressman is the problem, it’s always someone else’s.

    • Adam says:

      People feel they would have to assign some blame to themselves if they voted for him, and since people like to believe themselves as being right, that doesn’t happen.

  6. Studebaker says:

    The biggest concern is that businesses will drop the company health plan and push workers to the exchange.

  7. Frank Timmins says:

    To be sure, Congressman Van Hollen is lying through his teeth. This law impacts “all” employers that are not civil service because it restricts the type of benefit plan that employer may provide (based upon the particular needs of that employer group).

    To say that only 5% of the employers are impacted is like saying that only 5% of the buildings in London were impacted by the Nazi bombing on a given night in 1940 by virtue of the fact that only 5% were hit by bombs and destroyed. The problem at issue is they were being bombed, not that only 5% were actually hit. Just because an employer happens to currently comply with the ACA rules doesn’t mean they will be in compliance with all future edicts.

    What a disingenuous and preposterous comment Van Hollen made.