Analysis: King v. Burwell Decision Means Employer Mandate Stays, Stifling Economic Growth

One legal expert familiar with the nuances of the Affordable Care Act tells Breitbart News the Supreme Court’s King v. Burwell decision means the employer mandate is now permanent unless Congress changes the statute. One consequence of that will be the stifling of economic growth across the country.

“If the court had done the right thing yesterday, all businesses in all 34 states [that chose not to establish health care exchanges] would not have to cut jobs or hours because they would be without any fear of Obamacare non-compliance penalties,” the expert notes.

After King v. Burwell, the legal expert says “if you have 49 employees, you will never add a 50th.”

The Affordable Care Act required that all employers with 50 or more employees provide health care that meets very specific high standards for their employees. If they did not, they would face Obamacare compliance penalties of around $2,000 per employee per year. For larger companies, for example, one with 5,000 employees, the annual penalty could be as much as $10 million per year.

The administrative and financial nightmare for most companies with more than 50 employees is that their current health insurance plans are often considered “non-compliant” with Obamacare standards. So these companies either have to increase their health insurance programs or drop them entirely and face the high Obamacare penalties.

The negative impact on economic growth will largely come from the impact the King v. Burwell decision has on small growing companies with fewer than 50 employees. Numerous academic studies have shown that new jobs are added to the economy not by large Fortune 500 companies, but instead by new entrepreneurial startups with innovative products or services.

These startups are often cash-starved, and in the early stages are unable to offer their employees the kind of “gold plated” health care plans Obamacare mandates requires. As a result, these job generating innovators will find that their chances of survival after the Burwell decision will greatly increase if they do not hire more than 49 employees.

Companies that, without Burwell, might have skyrocketed in growth to thousands of employees will instead hover at 49, hire contractors rather than full time employees, cut new hires to 29 hours rather than the full 40 hours, replace employees with technology at a more rapid pace, and subcontract work to other companies, either in the United States or offshore.

“There are five central pillars to Obamacare,” the legal expert tells Breitbart News.

“One is on the demand side. Four are on the supply side.”

“On the demand side is the individual mandate. On the supply side there is the expansion of Medicaid, setting up state run health exchanges, the provision of subsidies to those exchanges by taxpayers, and the employer mandate, which requires employers of 50 or more to offer health insurance plans to their employees that meet the standards of the Affordable Care Act.”

The trick on the employer mandate is that the sole trigger for non-compliance penalties is if one employee of a company—tracked by his or her Social Security number—also receives an exchange subsidy, that event makes the employer liable for the mandate and related penalties.

There are businesses approaching that 50 employee threshold who have had to lay off workers because they can’t afford to offer the gold plated Affordable Care Act required health insurance plan or pay the hefty non-compliance penalty. The penalty would not be just for the one employee that causes the trigger.

“If the Supreme Court had gotten rid of subsidies [in those states that chose not to establish health care exchanges] all those employers in all those states would have been free of those mandates . By saying that subsidies now apply in all 50 states in this decision, the Supreme Court has now forced almost every employer in all 50 states to be fully subject to employer mandates, which is a job killer.”

Legal experts tell Breitbart News that prior to King v. Burwell, the application of the employer mandate in states that did not establish health insurance exchanges “was in legal limbo.”

Much of this was the result of administrative changes made by the Obama administration in order to delay the negative political impacts implementation of the employer mandate would cause.

As Grace-Marie Turner, founder and head of the Galen Institute, wrote on Tuesday, “By our count at the Galen Institute, more than 51 significant changes have been made to the Patient Protection and Affordable Care Act, at least 32 that the Obama administration has made unilaterally, 17 that Congress has passed and the president has signed, and two by the Supreme Court.”

Two of the changes made to the law via administrative action related to the employer mandate.

On July 2, 2013 the Obama administration first delayed the employer mandate, “By an administrative action that is contrary to language of the ACA, enforcement and reporting requirements for the employer mandate were delayed by one year until 2015.”

Then on February 10, 2014, the administration “delayed again” on the employer mandate. “The administration delayed for an additional year provisions of the employer mandate, postponing enforcement of the requirement for medium-size employers until 2016 and relaxing some requirements for larger employers. Businesses with 100 or more employees must offer coverage to 70% of their full-time employees in 2015 and 95% in 2016 and beyond.”

Legal experts say the Obama administration pulled that number of employees—100—“out of thin air.”


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