Unconstitutional Individual Mandate Would Obviate Need for Employer Mandate, Benefits Council Says

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If the individual mandate under health care reform is struck down, it will render the employer mandate meaningless, the American Benefits Council (ABC) argues in an amicus brief to the U.S. Supreme Court.

ABC does not argue about the constitutionality of the individual mandate; instead it says that it is non-severable from the law’s insurance market reforms and its employer mandate. Declaring the individual mandate unconstitutional would affect the operation of those two health reform provisions, the group stated.

Without an individual mandate, the law’s insurance market reforms (including prohibitions on pre-existing condition exclusions or waiting periods, the ban on coverage eligibility rules based on health-related factors and preventive care coverage requirements) would become unworkable, ABC says.

The individual mandate was not enacted for its own abstract value, but in order to make workable the insurance market reforms that were the central goal, because all the evidence showed that they could not function successfully absent the broader market participation that the individual mandate would supply.

The group goes on to say that removal of the individual mandate would prevent the employer mandate from functioning, because the employer mandate (with its minimum coverage and reporting rules) is meant to support the individual mandate, which in turn is meant to spread risk and make reform’s mandated coverage more affordable. If the individual mandate does not exist, the supporting role employers would have under their mandate would have no purpose, the group says.

The employer mandate was not simply a free-standing add-on to a long list of provisions in the law, but inextricably entwined with the individual mandate, incapable of functioning as Congress intended in its absence.

The individual mandate is like the upper parts of a bridge (including the roadway), and the employer mandate is like the pillars that hold up the bridge. What’s the point of having pillars without the suspension cables, suspenders and roadway?, Attorney James Napoli with Proskauer Rose in Washington, D.C., tells SmartHRManager. The brief, written by Napoli, states:

The employer responsibility provisions serve as a base to support the individual mandate through the private employer provided insurance market. As such, Congressional intent in implementing the employer responsibility provisions of the ACA would be frustrated without the individual mandate and related individual-market reforms because the employer responsibility provisions would lose their purpose.

Failure to offer creditable coverage can subject an employer to one of two tax penalties. For failing to offer any health insurance coverage, an employer can be penalized $2,000 per year for every full-time employee, minus the first 30. Failing to offer adequate coverage (under either “affordability” or “minimum value” standards) can subject an employer to penalties $3,000 per year for each full-time employee who is forced to get insurance on the open market.

The high court is reviewing two cases about the constitutionality of health reform: National Federation of Independent Business v. Sebelius and State of Florida v. HHS.

For answers to all your questions about health reform, see the The Health Reform Law: What Employers Need to Know (A Q&A Guide), by Thompson Publishing Group.