The delay in the Obamacare Employer Mandate has been in the news for a few days now, but one thing hasn’t been answered…how much will it cost? Surely the CBO will come out with an estimate sooner or later, but I thought I would take a wild ass guess now…then see how it turns out.
First…some background. The employer mandate is a $3000 penalty that businesses with over 50 employees must pay if they don’t provide health insurance for their employees. This was an important part of the initial financial case for Obamacare…these penalties were supposed to help offset the cost of the program, making it appear cheaper than it was.
So now…Obamacare will be implemented next year with all of the cost…but without some of the revenues (the individual mandate apparently will stand….bet you wish you had a lobbyist like big business huh 🙂 ) This article at money.com gives us some numbers to play with. Supposedly, only 70,000 businesses exist with over 50 employees that do not currently provide insurance. So…we know these companies have over 50 employees…let’s assume the average is 150, so 10.5M employees, at $3000 each, so $31.5B in lost revenues. Obviously…this is a wild guess with the key being the average # of employees. Maybe it’s 51, maybe it’s 1000. Guess we’ll have to wait for the CBO…hopefully they have a little bit better data to work with than I do.
Now…there are two big uncertainties in my mind about the 2014 deficit. The first is revenues. Will we see 10%+ growth again, low single digits, or even see a decrease? I really don’t know. If I had to guess, I’d probably say 5% growth, but there is enough uncertainty to blow up my forecast if I miss it.
The second is Obamacare. I’ve seen a few estimates ranging from $60B to over $100B per year. Before this delay, I was pondering about the timing of the cash flows. For example, I would expect that the outflows would probably occur steadily throughout 2014 as incurred. The inflows….the penalties paid by employers and individuals….I would expect these to be paid in early 2015…as part of their 2014 tax return. This timing mismatch…if material, could in theory cause a spike in 2014 outlays, followed by a mini spike in 2015 revenues. I’m not really sure how to model it all at this point…I am really hoping that Treasury adds a revenue and outlay line to the Daily Treasury Statement giving us a wealth of data to analyze…fingers crossed 🙂