While the eventual effect of the employer mandate on the uninsured rate may turn out to be underwhelming, the provision's near-term political impact on the business community was galvanizing. The mandate seemed more like a diabolical plot to induce business lobbies (traditionally Republican-leaning) to endorse Medicaid eligibility expansion rather than a method to actually provide insurance to a significant number of people. And it would have worked, if it weren't for those pesky state legislators.

The Obama Administration delayed by one year the employer mandate last Wednesday, the same day that the Pennsylvania House of Representatives effectively killed Medicaid eligibility expansion in that state. While the two events may not be strictly related casually, the inability of states like Florida and Pennsylvania to pass Medicaid eligibility likely did play a role in the delay.

The employer mandate was the impetus for business coalitions in Florida and Pennsylvania to apply pressure on their respective legislatures to pass Medicaid expansion. Companies with a significant portion of their workforce making less than 138 percent of federal poverty level had hoped that these employees would be covered by Medicaid. But without this expanded safety net, the employers were on the hook for these employees. They would have to pay fines, buy insurance, or have layoffs.

This is why business groups joined health systems, insurers, medical societies and a host of other groups to lobby their legislatures for Medicaid eligibility expansion. Normally, when that much clout is thrown behind a cause, it has a good chance of passing. In both Florida and Pennsylvania, a form of Medicaid expansion passed through the state senates.

But these efforts faced roadblocks in their lower chambers. The Florida House killed the expansion by proposing a costlier, less effective form of Medicaid expansion, and the session ended in May without a bill. Last week, the Pennsylvania House simply took out the expansion language the Senate had inserted into a welfare bill. On this issue, the business community had little sway on states representatives, where politicians with a smaller constituent base had to worry more about a primary challenge. In Florida and Pennsylvania combined, about 1.5 million people will remain uninsured who would have qualified for Medicaid under the expansion.

The employer mandate was not going to help that many uninsured; nearly all large companies already offer coverage to employers, and there is no mandate. There is compelling reason to believe that the employer mandate is bad policy that should be rescinded entirely, since it discourages employers from hiring subsidy-eligible applicants and encourages switching workers to part-time.

When it became clear that the mandate's political goal to get chambers of commerce on board for Medicaid expansion had no effect on state-level GOP House leaders, there was little incentive for the Obama Administration to rush out the complicated provision. The administration has signaled that states that haven't already expanded Medicaid may be a lost cause until 2015, after the individual mandate and exchanges have had an impact on midterm elections in November 2014.

Follow Mark Cherry on Twitter @MarkCherryHLI

DRG becomes Clarivate

View Now