By Elizabeth Price Foley and David B. Rivkin Jr. — Tuesday, March 10, 2015
Since its partisan passage in 2010, Obamacare has traversed a rocky road. President Obama has taken numerous executive actions to delay and modify the poorly written law in an effort to ease the political consequences of full implementation and make it work. However, in the president’s zeal to rewrite yet another area of law — immigration — he’s sabotaged one of Obamacare’s primary goals: expanding employer-sponsored health insurance.
The president’s executive actions on immigration — the major one of which is currently on hold due to a court order — confers two specific benefits upon approximately 6 million individuals who have entered this country illegally or overstayed their visas. First, they are completely exempted from deportation. Second, they are granted work permits. These unilaterally conferred benefits are powerful evidence that the president isn’t just exercising executive “discretion” by prioritizing enforcement of existing immigration law — he is rewriting it.
This massive influx of now-lawful workers will predictably reduce job opportunities for U.S. citizens and lawful residents. But beyond this obvious negative impact, granting work permits to these individuals will have a subtler, equally pernicious effect: It will encourage employers to hire these 6 million individuals over U.S. citizens and legal residents. This is due to Obamacare’s structure.
Under Obamacare, employers must pay a tax — called the “employer responsibility” tax — if they either fail to offer insurance altogether, or they offer “substandard” insurance. The employer responsibility tax is hefty, ranging between $2,000 to $3,000 per year, and is payable for every full-time employee who buys health insurance on an exchange and receives a tax subsidy as a result. The idea is to incentivize employers to offer generous insurance coverage, thus keeping workers off the exchanges, and away from tax subsidies. If no full-time worker receives a tax subsidy for buying health insurance, the employer will pay no employer responsibility tax.
Under this scheme, the “ideal” worker — in terms of minimizing exposure to the employer responsibility tax — is a worker who is incapable of obtaining a tax subsidy for buying health insurance. Who are these workers? One large category is the 6 million immigration action beneficiaries. As Homeland Security Secretary Jeh Johnson confirmed at a recent hearing of the House Homeland Security Committee, beneficiaries of the president’s immigration actions “will not be eligible for comprehensive health care, ACA.” That is, they won’t receive government subsidies to purchase health insurance.
Because the 6 million immigration beneficiaries aren’t eligible for Obamacare tax subsidies, hiring them reduces employers’ chances of triggering the employer responsibility tax. Employers have a powerful financial incentive to hire them in place of U.S. citizens and permanent residents. The president’s unilateral grant of work permits, combined with the fact that these workers cannot trigger the employer responsibility tax, makes those workers significantly more attractive.
To make matters worse, recent reports indicate that millions of U.S. citizens and lawful residents — who are eligible to receive Obamacare tax subsidies — have opted to defy the individual mandate and forego buying expensive health insurance. Under the statute, that’s supposed to trigger a tax, too, but the president has effectively gutted this provision by unilaterally creating 19 categories of exemptions, including a blanket one for “general hardship.”
Because individuals who don’t buy health insurance won’t be claiming any Obamacare tax subsidies, they — like the 6 million immigration action beneficiaries — cannot trigger the employer responsibility tax. Both of these categories of workers are more attractive to hire, because they will not, by definition, have subsidized health insurance under Obamacare. The inevitable result is that more workers will lack employer-provided health insurance coverage.
The president isn’t a one-person lawmaker. He doesn’t have the power in our constitutional regime to fix laws he thinks are broken. When a president does so, he not only intrudes on Congress’ power, but also creates unpredictable repercussions for other laws. It’s no small irony that, by unilaterally attempting to fix our immigration law, Mr. Obama has undermined his own signature legislative achievement.
Elizabeth Price Foley is a constitutional law professor at Florida International University College of Law. David B. Rivkin Jr. is a partner at the firm Baker Hostetler LLP, and served in the Justice Department and the White House Counsel’s Office in the Reagan and George H.W. Bush administrations.