Since the Obama administration decided to delay the employer mandate I have noticed a disturbing trend where the defenders of the Affordable Care Act (ACA) are aggressively downplaying the role of the employer mandate. The latest example is Paul Krugman calling it “minor.” From Krugman:

So there you have it: health reform is a three-legged stool resting on community rating, individual mandates and subsidies. It requires all three legs.

But wait — hasn’t the administration delayed the employer mandate, which requires that large firms provide insurance to their employees? Yes, it has, and Republicans are trying to make it sound as if the employer mandate and the individual mandate are comparable. Some of them even seem to think that they can bully Mr. Obama into delaying the individual mandate too. But the individual mandate is an essential piece of the reform, which can’t and won’t be bargained away, while the employer mandate is a fairly minor add-on that arguably shouldn’t have been in the law to begin with.

The employer mandate is a huge provision. It is one of the largest funding mechanisms in the law. Delaying it just for 2014 will cost the government around $12 billion and increase the number of uninsured by roughly half a million.

If it were completely eliminated the government would directly lose another $140 billion in new revenue over the next ten years and spending on the new exchange subsidies would also increase by billions more. Combined with the Cadillac tax you could also risk unraveling the current employer provided health care system. While some wonks might even support such a big change, it would have massive implications for tens of millions of Americans.

The ACA without the employer mandate would likely produce a system radically different from the one Democrats promised. The three-legged stool Krugman describes is a system where almost everyone buys individual coverage, but that is not what President Obama sold to the American people. If you want to maintain employer-based insurance you need an employer mandate for a four-legged table. The employer mandate is the primary justification behind the promise of  ”if you like your current insurance you can keep it.”

Although its particular design is terrible, the downplaying of the provision to defend Obama is dangerous because the structure of the law depends heavily on the employer mandate’s functionality. It is a massively important policy that will need a dramatic overhaul.

Photo by Allan Foster released under Creative Commons License