There’s nothing magical about the individual mandate. No one loves it; no one champions it. It’s a solution (not the only one mind you) to the problem of adverse selection or free-riders. That’s why it exists.
The employer penalty exists for a different reason. It lowers the cost of the law. And now it appears that it’s been put off for a year.
You see, we have (largely) an employer based insurance system. This is a quirk of history, born out of wage freezes in World War II. To compete for employees, businesses started offering benefits like health insurance. Then we created the tax deduction for employer-purchased insurance, which made it even more attractive for people to get coverage through their jobs. Now, most people do.
If businesses don’t offer insurance right now, then people don’t find the jobs as attractive. It’s hard, after all, to get insurance as an individual. But starting in 2014, it becomes much easier. Not only will the exchanges appear, but many, many people will qualify for subsidies to help them pay for the insurance. Those subsidies cost a lot of money. To lower the amount we’d have to pay for these subsidies, the employer penalty was put in to encourage businesses to provide insurance instead of letting people go get those subsidies on the exchanges. Without the employer penalty, more people would get them through the exchanges.
But just as with the employer penalty, there are (and were) other options. Or, we could have just sucked up the additional cost of not having the penalty. Or, we could just abandon the employer-based system altogether, which is what Wyden-Bennett might have done. Even Sen. McCain proposed decoupling this tax preference from employment, although without the exchanges that other reforms included.
My point is this: The employer penalty was a solution to try and reduce the cost to the government by shifting more of the cost of insurance onto employers. It has good parts and bad parts. Personally, I agree with Ezra that it could have been done better. I also think the individual mandate could have been done better. But I’d rather see the government work to fix these ideas rather than haphazardly hold them up or suspend them. They were there for a reason. Those reasons haven’t changed.