March 26, 2014
Is the Mandate mandatory?
Posted by Brett Scharffs

Professor Lederman scolds me for saying that the mandate, indeed the entire Affordable Care Act, does not apply to employers with fifty or fewer employees. He asserts, “That’s just wrong,” and provides a link.

Under a headline, “The mythical ‘small employer” exception,” Marty explains:

"Small employers that choose to offer health insurance plans to their employees must provide coverage for recommended preventive services -- including contraceptive services -- without cost-sharing, just as larger employers do.

Conestoga Wood points out that the ACA does not require employers with fewer than 50 full-time employees ”to offer healthcare coverage at all.”  That’s true."                                

This is what I meant when I said the ACA does not apply to employers with fewer than 50 employees. They may choose not to offer health care without suffering a penalty. When I talk to my neighbor across the street who is a small businessman who is capping his workforce at 49, it is because he does not want to become subject to the ACA’s requirements or its penalties. 

Professor Lederman continues: 

"But as I’ve explained at great length in previous posts, the ACA doesn’t require any employer to offer healthcare coverage.  If an employer -- large or small -- does not offer an employee plan, its employees will be eligible for coverage on a government-subsidized exchange, which must include the required preventive services."

On Marty’s reading, not only is the mandate not mandatory, the entire ACA is optional. I guess we can all call it a day. In a sense this is technically true. If Hobby Lobby choses to drop its health care plan, it will be required to pay what the justices yesterday were describing as a “penalty” or (in a nod to Chief Justice Roberts’ earlier ACA opinion) a “tax” of $2,000 per employee, or about $26 million. On the other hand, if Hobby Lobby continues to offer health care but excludes the contraceptives at issue here, then they will be subject to a daily fine of about $1.3 million, which is where the $475 million number came from that appeared in the exchange between Hobby Lobby’s lawyer, Paul Clements and Justice Kagan. 

In that exchange, Justice Kagan said, “These employers could choose not to give health insurance and pay not that high a penalty – not that high a tax.” 

Mr. Clement answered, “Well, just to put this in concrete terms, for Hobby Lobby, for example, the choice is between paying a 500 – a $475 million per year penalty and paying a $26 million per year coverage.”

Justice Kagan responded, “No, I don’t think that that’s the same thing, Mr. Clement. There’s one penalty that is if the employer continues to provide health insurance without this part of the coverage, but Hobby Lobby could choose not to provide health insurance at all. And in that case Hobby Lobby would pay $2,000 per employee, which is less than Hobby Lobby probably pays to provide insurance to its employees.” 

Thus, technically speaking the mandate is not mandatory, but Hobby Lobby will be subject to taxes of $26 million if it discontinues its health care plan, or penalties of $475 million if it refuses to bend to the ACA’s contraceptive mandate. Justice Kagan seemed to be suggesting that at least the $26 million option might not constitute a substantial burden since that might be the approximate cost of providing health care. Chief Justice Roberts injected that he understood Hobby Lobby to feel a religious obligation to provide health care to its employees, and the discussion then shifted to how this might affect how much Hobby Lobby would have to pay employees if they dropped their health care plan. Also interesting are the implications for whether imposing the health care mandate on Hobby Lobby furthers a compelling state interest in the event the mandate is not mandatory at all.

Hobby Lobby | Bookmark

TrackBacks (0)

TrackBack URL for this entry:

Links to weblogs that reference Is the Mandate mandatory?:

Recent Comments
Popular Threads
Search The Glom
The Glom on Twitter
Archives by Topic
Archives by Date
January 2019
Sun Mon Tue Wed Thu Fri Sat
    1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31    
Miscellaneous Links