May 15, 2014
Authored by: Chris Rylands
Humans are not logical. Consider popular Star Trek characters Mr. Spock or Lt. Cmdr. Data (depending on which generation of Star Trek you prefer). Either by choice or by nature, each was constrained to view the world through the lens of dry, passionless logic. This predilection made them stand out among their fellow characters who were more, well, human.
Why does this matter? Well, a recent Robert Wood Johnson Foundation/Urban Institute Issue Brief suggests there would be a very minimal drop (0.3%) in employer-sponsored coverage if ACA’s employer mandate was eliminated. It would also minimize labor market distortions that the mandate, anecdotally, seems to be creating, the brief says.
But the report fails to consider the psychological impact of the play or pay mandate. Having the play or pay mandate (or the tax, as the Supreme Court said), sends a message that it is a bad act for an employer to drop coverage.
It’s a version of what psychologists call “normative social influence.” In short, we like to be liked so we will do what we think people want to achieve that goal, even if we don’t believe in it. This influence goes beyond pure logic, and it is not something that is easily measurable in this context.
My contention is that the mandate is not simply a dollars-and-cents proposition. It also says that the government disapproves (and therefore we should all disapprove) of pushing employees to the marketplaces. Eliminating the mandate sends the opposite message: that it’s okay to send employees to the marketplaces, so do what you want.
Since this effect isn’t easily measurable, its exact influence is hard to pin down and nearly impossible to disaggregate from the economics and employee relations concerns (both of which are also valid considerations). However, if the mandate is eliminated, do not be surprised if there is a more than 0.3% drop in employer-sponsored coverage since employers will have gotten a different message.