Repeal the Job-Killing Employer Mandate

Sep 14, 2011

As our nation works to pull out of a recession with record unemployment stubbornly hovering above 9%, the Patient Protection and Affordable Care Act’s employer mandate only further hinders economic recovery.  Recognizing this, legislation to repeal the provision will reduce the impending financial burden and general uncertainty facing employers as a result of the mandate. 

The 33 senators and the 144 members of the House co-sponsoring S. 20 and H.R. 1744, understand that this mandate restricts growth and creates perverse incentives for companies to reduce the number of full time workers and to hold on to their capital.  The non-partisan Congressional Budget Office has concluded that the mandate will result in lower wages, fewer jobs, and more part-time jobs at the expense of full-time jobs.  To be precise, the CBO reported that 800,000 jobs will be lost as a result of the law.

Despite promises that the health reform law would build on the existing employer sponsored system, the mandate will in fact undermine the current system.  It will be more affordable for employers to pay the penalty for failing to offer coverage than to offer coverage itself. And so, ironically, the employer mandate incents employers to stop offering health care coverage.   We need to look no further than the facts to know that this is the case:

  • In 2010, the average annual cost of employer-sponsored health insurance in 2010 is $5,049 for single coverage.
  • In contrast, in 2014 employers would have to pay a penalty for not offering coverage amounts to between $2,000 and $3,000 per employee. 
  • With medical costs expected to increase from 8% in 2011 to 8.5% in 2012, it is not hard to guess how back of the envelope calculations will come out as employers struggle to regain their financial footing in the wake of the recent recession.

As if the facts are not persuasive enough – numerous studies indicate the harm the employer mandate will inflict on jobs – most recently, the Hudson Institute yesterday issued a report which found that the law puts more than 3.2 million full time jobs at risk.

So the result of the mandate is clear: Fewer jobs, less investment, and slower economic recovery. That is not good for employees, employers, or our weak economy.  But there is time to reverse this trend. We must repeal the employer mandate immediately. 

The Chamber remains committed to repealing this job-killing mandate. Along with businesses from nearly every industry and sector, including those representing the restaurants, retail, manufacturing, roofing, and wholesale industries, we appreciate the efforts of Senate and House co-sponsors to repeal this provision.

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