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Jon Greenberg
By Jon Greenberg September 18, 2013

Van Hollen says employer mandate affects 5% of businesses

On Obamacare, Republicans generally fall into two camps. One group wants to defund it entirely and the other wants to delay putting it into action. President Barack Obama gave the delay group some ammunition in July when he made the surprise decision to hold off enforcing the employer mandate. That provision in the Affordable Care Act requires most firms with 50 or more workers to offer insurance or face a penalty of $2,000 per employee. There are some wrinkles, but that’s the gist of the mandate.

Rep. Chris Van Hollen, D-Md., defended the president’s move, arguing that it had little impact on the overall goal of the health care reform law. He made this point during a quick back and forth with the show host on Fox News Sunday.

Van Hollen: The reality is that Obamacare is already in place for millions of Americans.

John Roberts: But it's been delayed for millions of others.

Van Hollen: No, no, no. The employer mandate, which affects only 5 percent of businesses in this country, which is a relatively small part of the overall system."

In this fact-check, we note for the record that Van Hollen shifted from talking about individuals to talking about businesses, and the two should not be confused. However, our focus is on his claim about the number of businesses.

We contacted Van Hollen’s office, and the staff there referred us to a couple of key sources. First, the Census Bureau surveys the business community and in 2010, it counted about 5.7 million firms. Of those, about 211,000 had 50 or more employees. Do the math and you find that 3.6 percent of all firms would be subject to the employer mandate.

Van Hollen’s other source is a report from the Congressional Research Service, the nonpartisan think tank for Congress. The study published last month found that 96.3 percent of firms would be exempt from the employer mandate because they were too small. Flip that around and 3.7 percent would be affected by the requirement to offer insurance.

So if anything, Van Hollen overstated the fraction of firms that would need to worry about the mandate.

You have to use a certain amount of care when looking at estimates of the number of firms, because different groups use different methods. The highly respected research center, the Kaiser Family Foundation, reports that 7.3 percent of firms have 50 or more workers. Kaiser, however, only surveys companies with at least three employees. That eliminates more than 2 million firms that the Census Bureau includes.

Another widely used source, the Agency for Healthcare Research and Quality, located within the Department of Health and Human Services, produces the Medical Expenditure Panel Survey. According to its tally, about 25 percent of all establishments are firms with 50 or more workers.

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We did not find a clear explanation for these differences, but experts suggested to us that they could be due partly to varying survey methods and partly to varying definitions of establishments (as a place of work) and firms (as a single owner of several establishments).

That said, the Census Bureau enjoys broad trust, and we weigh its numbers accordingly.

Thomas Buchmueller, an economist at the University of Michigan who has written about the impact of Obamacare on businesses, said the 5 percent figure could be too high for another reason.

"Around 90 percent of firms with 50 or more employees offer health insurance today, and when you get up to 100 employees, coverage is essentially universal," Buchmueller said. "So the mandate will be a binding constraint for a very small number of firms -- the small number of medium-sized firms (say 50 to 99 employees) that currently do not offer insurance and a few more in that size range that might be thinking of dropping coverage."

As one final caveat, looking at the mandate through the lens of business does not tell the whole story. During his television interview, Van Hollen began by talking about the number of people and then brought up the number of companies. As we noted, the two are quite different. According to the Census Bureau, about 72 percent of workers in companies - which is not a complete count of all workers - are in firms with 50 or more employees.

While over 90 percent of those firms offer insurance, Christopher Conover, a policy analyst at the Center for Health Policy and Inequalities Research at Duke University and an adjunct scholar at the American Enterprise Institute, cautioned that just because you work at a company that offers insurance, that doesn’t mean you actually get it.

"With 44 percent of working uninsured located in firms with 50-plus employees," Conover said, "it’s obvious that the employees lacking coverage do not work exclusively for the tiny fraction of such firms not offering coverage."

These people might work part time, or might have declined coverage, or they might be waiting to be eligible for coverage. Conover based his findings on the work of the Employee Benefit Research Institute. He said it’s a complicated picture but one that underscores the challenges of implementing Obamacare -- a process that he would like to delay.

Our ruling

Van Hollen said that 5 percent of businesses would be affected by the employer mandate in the Affordable Care Act. While different surveys produce different numbers, the Census Bureau has been in this line of work longer than any other body, and its data show that 3.6 percent of firms employ 50 or more workers. That is the group for which the mandate would apply; other firms are too small. The Congressional Research Service relied on the Census data. We found no one who challenged the Census numbers.

So Van Hollen’s figures are correct. However, his claim focuses our attention on the number of firms, which makes the mandate issue look small. But when seen through the lens of individual workers, it is a bigger deal. How big is difficult to say but the significance is larger than the 5 percent number he used.

In PolitiFact terms, the statement is accurate but needs clarification or additional information.

We rate the claim Mostly True.

Our Sources

Fox News, Fox News Sunday, Sept. 15, 2013

U.S. Census Bureau,  Number of firms, number of establishments, employment, and annual payroll by small enterprise employment sizes for the United States, Oct. 2012

Congressional Research Service, The Affordable Care Act and small business: Economic issues, Aug. 15, 2013

PolitiFact, Sen. Robert Menendez says Obamacare’s employer mandate affects 1% of U.S. workforce, July 12, 2013

Kaiser Family Foundation, 2013 Employer health benefits survey, Aug. 20, 2013

Kaiser Family Foundation, 2013 Employer health benefits survey - chartpack, Aug. 20, 2013

Kaiser Family Foundation, 2013 Employer health benefits survey - methodology, Aug. 20, 2013

Interview, Bridgette Frey, communications director, Office of Rep. Chris Van Hollen, Sept. 17, 2013

Email interview, Thomas Buchmueller, health economist, University of Michigan, Sept. 17, 2013

Health Affairs, Will employers drop health insurance coverage because of the Affordable Care Act?, OSeptember 2013

Agency for Healthcare Research and Quality, Percent of private-sector establishments that offer health insurance by firm size and selected characteristics: United States, 2012

Email interview, Christopher Conover, policy analyst, Center for Health Policy and Inequalities Research, Duke University, Sept. 17, 2013

Forbes, News Flash: 46% of working uninsured are in large firms subject to employer mandate, July 5, 2013

Bureau of Labor Statistics, Distribution of private sector employment by firm size class: 1993/Q1 through 2012/Q1, not seasonally adjusted

Employee Benefit Research Institute, Sources of health insurance and characteristics of the uninsured: Analysis of the March 2012 Current Population Survey, Sept. 2012

White House, Health reform for small businesses

Email interview, Karen Davis, survey statistician, Agency for Healthcare Research and Quality, Sept. 17, 2013

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