Policy

More Smoke Than Light Over the Obamacare Delay


More Smoke Than Light Over the Obamacare Delay

Photograph by Getty Images

Yesterday evening the White House announced it would delay implementation of the employer mandate in the Affordable Care Act, giving businesses with more than 50 workers an extra year before they must offer health insurance to employees. The decision came in response to business owners’ “concerns about the complexity of the requirements and the need for more time to implement them effectively,” according to a July 2 blog post by a Treasury official. The agency said it will publish formal guidance on the delay within the next week.

Critics of the health reform bill were quick to jump on the announcement. Representative Sam Graves, a Missouri Republican who chairs the House Small Business Committee, complained in an e-mailed statement that “instead of providing relief for businesses, this simply kicks the can down the road.” Tweeted Senator Ted Cruz, a Republican from Texas: “How about we delay it all forever?”

ABC News’ Rick Klein says that red state Democrats are likely relieved by the delay, which will push the implementation of the employer mandate to after 2014 elections, and Ezra Klein argued that the administration’s “regulatory end run around Congress” wasn’t the best way to solve problems with the employer mandate.

The impact of the delay is unclear. Larry Levitt, a senior vice present at the Kaiser Family Foundation, told Kaiser Health News that “the large majority of employers already offer health coverage to their workers” and that the employer mandate was never expected to change that. Ninety-eight percent of companies with more than 200 workers and 94 percent of businesses with 50 to 199 employees already offer health care, according to Timothy Jost at Health Affairs Blog.

The crucial question, writes Jost, is how the delay will affect the overall costs associated with the law—particularly those involving tax credits offered to individuals: “But tax credits are only available to employed individuals who are either not offered health coverage by their employers or are only offered employer coverage that costs more than 9.5 percent of household income or that fails to offer ‘minimum value’—covering 60 percent of health-care costs. Also, taxpayers are subject to the individual mandate penalty if they fail to accept coverage from their employer that meets the minimum value requirement and costs 8 percent or less of household income.

“If employers have no obligation to report coverage, how will the exchanges or the IRS verify claims that coverage is unaffordable or inadequate?”

Dean Baker, co-director of the Center for Economic Policy Research, makes another good observation about the implications of the delay. “If the penalties actually were affecting hiring,” he writes in a blog post, “then we should soon see a hiring boom as firms need no longer fear being over the 50 worker threshold in 2013.”

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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