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Obama Administration Delays ACA's Employer Mandate by One Year

Obama Administration Delays ACA's Employer Mandate by One Year

July 3, 2013 — The Obama administration on Tuesday announced that it will postpone for one year -- until 2015 -- the Affordable Care Act's (PL 111-148) employer mandate to address concerns about its reporting requirements, the New York Times reports (Calmes/Pear, New York Times, 7/2).

Under the provision, employers with at least 50 workers beginning in 2014 would have had to provide affordable health coverage or face a $2,000 fine per worker (Goldfarb/Somashekhar, Washington Post, 7/2). Some business owners have suggested they would lay off workers or switch them to part-time hours to avoid the mandate.

Administration's Announcement

In a pair of announcements posted late Tuesday on the White House blog and the Department of Treasury blog, officials said the delay would provide businesses with more time to comply with the provision's reporting requirements. The blog posts did not suggest that there will be a similar delay for the individual mandate, which requires most people to have health insurance by Jan. 1 or face penalties (New York Times, 7/2).

In the White House blog post, Valerie Jarrett -- a senior adviser to President Obama -- wrote, "We believe we need to give employers more time to comply with the new rules." She added, "This allows employers the time to ... make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers" (Washington Post, 7/2).

Administration officials also described the move as part of the administration's efforts to simplify or reduce regulatory red tape across government agencies, Bloomberg reports.

Administration officials said the delay comes after the White House held talks with business groups about the mandate. Last month, the Business Roundtable in a comment letter on the mandate said the reporting requirements would demand "substantial changes in administrative procedures and reprogramming of recordkeeping systems" (Dorning/Wayne, Bloomberg, 7/3). Further, some companies had difficulties determining what constitutes a 50-employee firm and who qualifies as a full-time worker, Kaiser Health News reports (Hancock/Appleby, Kaiser Health News, 7/2).

In the Treasury Department's blog post, Mark Mazur -- an assistant Treasury secretary -- wrote, "We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so." Mazur noted that within the next week, the Treasury Department will issue official guidance to insurers, self-insuring employers and other parties that provide health coverage, adding that formal rules would be proposed this summer (New York Times, 7/2).

However, Mazur said employers would be "strongly encouraged" to "maintain or expand health coverage," as well as comply with the law's reporting provisions in 2014, as originally mandated (Reichard, CQ Roll Call, 7/2).

Implications of Delay

According to The Hill's "Healthwatch," the administration emphasized that delaying the employer mandate would not affect other aspects of the ACA, such as implementation of the health insurance exchanges and the individual mandate. In her blog post, Jarret wrote, "We are full steam ahead for the [exchanges] opening on October 1" (Sink, "Healthwatch," The Hill, 7/2).

Some health policy experts expressed concern about implementation of the other aspects and how the changes would affect coverage.

Sara Rosenbaum -- a professor of health law and policy at George Washington University and an ACA advocate -- said, "I am utterly astounded," adding, "It boggles the mind. This step could significantly reduce the number of uninsured people who will gain coverage in 2014" (New York Times, 7/2).

Paul Van de Water -- a health policy expert at the Center on Budget and Policy Priorities -- said the law could have implications for workers at mid-size companies who would have received coverage from their employers. He said, "At the margins, some firms that might have otherwise offered insurance may wait to see how things play out" (Haberkorn et al., Politico, 7/2).

In addition, the White House's decision could have significant financial implications, according to KHN. The Congressional Budget Office estimated that companies would pay about $10 billion in penalties in 2015. By delaying the mandate, the Treasury will likely see a decline in expected revenue (Kaiser Health News, 7/2).

Reaction

The business community immediately welcomed the administration's announcement. Randy Johnson, a senior vice president at the U.S. Chamber of Commerce, said, "The administration has finally recognized the obvious -- employers need more time and clarification of the rules of the road before implementing the employer mandate" (Bloomberg, 7/2).

Some ACA opponents and Republican lawmakers used the delay announcement to highlight what they call failures of the law, Kaiser Health News reports (Galewitz, Kaiser Health News, 7/2).

House Speaker John Boehner (R-Ohio) in a statement called on the administration to also delay implementation of the individual mandate, adding that Tuesday's decision "is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms" (Millman, Politico, 7/2).