In about a year and a half, the Obamacare employer mandate kicks in. Firms with 50 or more employees will be required to provide expensive health insurance for their workers and their dependents or pay a fine of $2,000 per employee. What difference will that make?
Suppose an employer has 49 low-wage workers. Because these workers can get highly subsidized health insurance in the (Obamacare) exchange, they don’t want health insurance from the employer. They would rather have the cash equivalent in the form of higher wages. Now suppose the employer hires one more worker. Not providing health insurance at this point subjects the employer to a $2,000 fine for each employee.
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