Obamacare Mandates: Why the Fairness Debate Doesn’t Matter

“Let me ask you this: Am I a stupid man?”

That was Jon Stewart’s question to HHS Secretary Kathleen Sebelius just a few minutes into an interview about the Affordable Care Act that aired Oct. 7 on “The Daily Show With Jon Stewart.”

His reason for the jab — which Sebelius quickly laughed off — was that he was getting stonewalled on a more serious query: Is it valid to criticize the Obama administration for delaying the ACA’s employer mandate but not the individual mandate?

This debate has been raging among health care wonks and the public for months, but here was the question in high definition, volleyed directly at Sebelius in front of an audience of millennials and progressives who helped elect President Obama twice over. While Sebelius faced a crowd that she hoped was on her side and a host typically supportive of liberal initiatives, the following morning’s newspaper and blog headlines read: “Jon Stewart Destroys Kathleen Sebelius” and “Kathleen Sebelius’ Daily Show Disaster.”

It’s true that Stewart and Sebelius sparred over several Obamacare issues, but it was the mandate that continued to vex the host throughout the interview.

Is the employer mandate delay a sign that the administration is catering to big business? And if not, why is the issue still fit to broadcast?

Details of Mandates, Delay

Under the ACA, employers with at least 50 full-time workers must provide affordable health coverage or face a $2,000 fine per worker after the first 30 employees. In early July, the Obama administration announced that it was delaying the employer mandate until 2015 to provide businesses with more time to comply with its reporting requirements.

House Republicans, in a letter sent a week after the announcement, questioned the decision to delay the employer mandate but leave the individual mandate intact. They wrote, “Please … provide to Congress your justification for only delaying the employer mandate at this time and not the new mandate on individuals and families,” adding, “We agree with you that the burden was overwhelming for employers, but we also believe American families need the same relief.”

Meanwhile, in August, the Treasury Department released a final rule governing how U.S. residents who fail to comply with the Affordable Care Act’s individual mandate will be penalized once the provision takes effect in 2014.

Under the final rule, nonexempt individuals who fail to purchase insurance must pay a fine of $95 or 1% of the household income, whichever is greater. The annual penalty will increase to $695 per person beginning in 2016 — or 2.5% of taxable annual income — with the total amount increasing with inflation.

Sebelius’ Defense

On “The Daily Show,” Stewart said, “[I]f I’m an individual [who] doesn’t want this … it would be hard for me to look at a big business getting a waiver. … I would think you are favoring big businesses who lobbied you to delay it because they didn’t want to do it this year, but you’re not allowing individuals the same courtesy.”

Defending the decision, Sebelius cited mechanisms of financial aid that already are in motion to help individuals buy coverage through state and federal health insurance exchanges. She said, “[I]ndividuals have tax credits coming their way, have financial help for the first time, and the market we are now running is available for them. So that didn’t delay and that didn’t stop.”

Watch a video of the interview below:

Her argument was simple: Nothing that helps an individual pay for insurance next year has been delayed, so why would it be necessary to delay the mandate?

That answer didn’t really answer Stewart’s question, which he asked again and again throughout the interview in search of a satisfactory answer: Even if individuals will have financial help next year, why can’t they have a delay if large employers can?

Experts Respond

Health care experts did not hesitate to engage this question directly — and some did it months before the interview aired on Comedy Central.

In July, Chris Conover of the Center for Health Policy and Inequalities Research at Duke University wrote in a Forbes‘ “The Apothecary” piece about potentially higher premium rates in the exchanges that could greet some low-income individuals, especially those who are healthy. He said, “Which leads to the obvious question: if employers need one extra year to ‘adjust’ to the added burden imposed by Obamacare, why shouldn’t the average American family be given the same relief? At a minimum, if the employer mandate is viewed as too onerous, then how could the individual mandate be any more palatable to the disproportionately low-income families who will confront it next January?”

However, more recent analyses have drawn on new data and rebuffed such a notion.

Edwin Park of the Center on Budget and Policy Priorities wrote that a similar delay for the individual mandate would not be “fair,” as some commentators and GOP lawmakers posit. First of all, think tanks — such as RAND Corporation and the Urban Institute — have found that delaying the employer mandate will barely affect health insurance coverage in that market (95% of large employers already offer health insurance to workers). Conversely, an individual mandate delay “would cause 11 million more Americans to remain uninsured in 2014,” Park explained, citing Congressional Budget Office data.

Josh Borrow, politics editor for Business Insider, wrote that the difference between the two mandates is “necessity.” Borrow noted, “If you don’t have an individual mandate, the risk is that only sick people will buy insurance, and then premiums will skyrocket, making it unaffordable for everyone.”

Basically, if you delay the individual mandate after the markets go live, then you ruin the centerpiece of the law.

The Big Sign-Off

Few of these angles were covered during “The Daily Show” interview — although Sebelius did say that most employers already provide health coverage and that delaying their mandate doesn’t really matter.

This did not satisfy Stewart, who monologued about the issue one final time at the end of the show: “I still don’t understand why individuals have to sign up and businesses don’t, because … if she’s saying, ‘Well, [businesses] get a delay because that doesn’t matter anyway because they already give health care,’ then you think to yourself … ‘[T]hen why do they have to sign up at all?'”

Stewart closed by saying, “And then I think to myself, ‘Well, maybe she’s just lying to me.'”

Although there’s no evidence that anything Sebelius said in the interview is a lie, it’s worth asking why she didn’t hammer home the point about the individual mandate being the centerpiece of the law or quote figures on the negative effect its delay would have. Maybe she was coached to push only the positive aspects of the new marketplaces or was just tired from the previous week’s worth of questions about glitches on the federally run exchange website.

But because findings on the issue from RAND, Urban Institute and CBO are public, we must also ask why Republicans and some commentators — including Stewart himself — continue to ask why an individual mandate delay cannot happen. In Stewart’s case, he’s likely standing up for his audience — many of whom are healthy young adults wondering why they must purchase health insurance right now — and building a case for a single-payer system, which he described during the interview as his idea of true health reform. His single-payer argument is solid, but it’s wishful thinking considering that Congress could not even pass a public plan option four years ago and that the more moderate health overhaul of Obamacare still became one of the most controversial laws ever.

Park, of the Center for Budget and Policy Priorities, assumed a more dire reason behind Republicans’ calls for delaying the individual mandate, saying they are “a central element of an effort to dismember health reform.” This strategy makes some sense — skyrocketing premiums resulting from insurance pools filled with only sick people would bring a ton of negative press to the law — but the notion that the GOP is willing to play that roughly with U.S. residents’ health and incomes on the line is a discouraging one.

Yet, such examinations seem more substantive than another back-and-forth on fairness in health insurance, like the interview on “The Daily Show.”

Borrow in Business Insider neatly summed it up: “The individual mandate is a tool that improves the overall fairness of the health care market by making insurance coverage broadly available and affordable. That’s why it’s fair. All the rest is noise.”

Weekly Roundup

Here’s a look at more recent health care reform news.

Enrollment Period or Ellipses?: Expert Nick Bagley — in an email picked up by The Incidental Economist — says he is 95% sure that the Obama administration will not delay the open enrollment period because of glitches in health care exchange websites.

Solutions in Question: Nicole Fisher at Forbes‘ “The Apothecary” notes that President Obama in a recent speech presented no real solutions for the exchange glitches but sadly doesn’t quite go as far as telling the president that he should learn to code.

Health Care Costnado: Jaan Sidorov at the Disease Management Care Blog says that early interest in the exchanges “could be an early sign of an incoming insurance death spiral,” a proverbial torrent that would occur if persons with high levels of risk disproportionately enter the exchanges.

Related Topics

Road to Reform The Health Law