In the wake of the Obama administration’s decision to delay by a year the health care law’s requirement that larger employers provide acceptable health insurance or pay a penalty, a number of conservative commentators have suggested that Republicans should push for a repeal of the individual mandate as well. Interestingly, President Obama may be able to do that in 2014 without much of a practical effect on the implementation of the law.
Over at the Weekly Standard, Bill Kristol makes the case for the GOP to call for a delay of the individual mandate, which remains one of the most unpopular provisions of Obamacare. The populist critique here is pretty clear. Under intense lobbying from big businesses, the Obama administration caved by delaying the employer mandate until 2015. But the individual mandate, which hits average Americans and happens to be supported by insurance industry lobbyists, is still on track to be implemented in 2014.
It’s understandable why the Obama administration would be reticent to delay the individual mandate. In theory, the provision is an essential stick in the effort to coerce younger and healthier Americans into obtaining insurance, which is intended to help insurers rake in enough profits to offset the costs of covering older and sicker Americans and those with pre-existing conditions. The individual mandate also may be the most well known provision of the law — which the administration fought all the way to the Supreme Court — so abandoning it would further advance the perception that Obamacare is going off the rails.
That said, delaying the individual mandate in 2014 may have less of a practical effect on the operation of the law than many realize. The reason is that next year, the penalty for non-compliance with the mandate is just $95, or 1 percent of taxable income. So it’s not clear how well it would work as a stick in 2014 anyway. By 2016, it would be $695, or 2.5 percent of taxable income, so eliminating it would have a more significant impact.
But the bigger problem for the administration here may be a legal one. As a number of people have noted, it’s questionable whether the Obama administration had the authority to delay the employer mandate without Congress, because the law says that the mandate “shall apply to months beginning after December 31, 2013.” Administration officials likely assumed they could get away with this unilateral action because it’s unclear who has both the motive and standing to sue.
With regard to the individual mandate, however, the insurance industry could have both. In fact, the insurance industry could sue by largely citing the Obama administration’s own briefs in the health care lawsuits about how essential the individual mandate is to a functioning health insurance market. It would be pretty awkward if Obama’s lawyers had to go back to court, this time to defend the administration’s right to delay the same individual mandate that they spent years fighting for in court.
Of course, if legislation delaying it were to pass through Congress, that would change the legal dynamic.