Repeal Obamacare? Yes, One Part of It

Well, maybe not all health care.

Photographer: Luke Sharrett/Getty Images

Congressional Republicans have never liked Obamacare. Come January, when they will control not only the House but also the Senate, they may finally be in a position to do something about it -- and President Barack Obama has pledged to listen.

Outright repeal would be about as pointless and foolish as it was the last few dozen times (but really, who's counting?) the Republicans tried it. Better instead to repeal the one part of the Affordable Care Act that both parties see as problematic: the employer mandate.

That's the part of the law that requires every company with 50 or more full-time employees to offer them insurance or pay a fine. The mandate creates a perverse incentive for employers to stay below the 50-worker threshold that triggers it. On a practical level, it has proved so difficult to implement -- companies must count hours for workers with fluctuating schedules, for example, and report to the government detailed information about the health benefits they offer -- that the Obama administration has already delayed it twice.

Eliminating the mandate, meanwhile, would help dissolve the connection between insurance and employment in the U.S., which is to the good. The link is a historical accident -- one that restricts worker mobility and wages.

That said, a repeal of the mandate would not be without cost, both monetary (anywhere from $46 billion to $149 billion over 10 years) and human. Congress will have to deal with the monetary cost somehow, though the falling deficit has made such concerns less urgent and Republicans can hardly be expected to oppose the repeal of a tax.

The human cost is more of a priority. If there is no employer mandate, many workers may lose their insurance -- though it's worth pointing out that most employers will still provide it as a benefit, as they do now. Still, the federal government needs to ensure that those who lose insurance be able to get it as cheaply they would have gotten it from their employers.

One way to do that is for the federal government to start enforcing a provision in Obamacare that prevents companies from offering health coverage only to its highest-paid employees. That would stop employers from responding to the mandate's repeal by canceling insurance for its low-paid workers. Those workers should be able to buy coverage on the federal and state-run health exchanges.

Which brings up another issue Congress would have to address: It needs to amend Obamacare to clarify that people who buy insurance from a federally run health exchange -- the federal government operates exchanges for 36 states that declined to build their own -- are eligible for federal insurance subsidies. Unclear language in the law has left that provision open to judicial challenge, and the U.S. Supreme Court has agreed to hear a case on this matter this term.

Republicans will be tempted to wait for that decision, hoping that a favorable ruling will effectively gut the law in many states. (They are not wrong: It would.) But the ruling could also go the other way. They may prefer to strike a deal eliminating the employer mandate than to take a judicial gamble.

Not all workers make enough to qualify for those subsidies. For them, the solution is for more states to expand Medicaid. In the 23 Republican-led states that have yet to expand their programs, those just under the poverty line make too little to qualify for coverage on the Obamacare state insurance exchanges but too much for Medicaid. Absent expansion, losing employer coverage will leave those workers without other options.

Of course, Republicans in Congress can't tell their state counterparts what to do. But many Republican governors, eager to reap the economic benefits of expansion, would appreciate political cover to do so.

No one need pretend any of this will be easy, or even likely. But eliminating the law's employer mandate, and amending other provisions to ensure workers can receive affordable insurance, offers a chance to both reduce the law's scope and expand its reach. It would be a pretty neat trick.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.