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Delay For Insurance Mandate Pleases Businesses

President Obama talked up the Affordable Care Act in San Jose, Calif., in June. Now, the administration has said a key provision affecting businesses won't take effect until 2015.
Evan Vucci
President Obama talked up the Affordable Care Act in San Jose, Calif., in June. Now, the administration has said a key provision affecting businesses won't take effect until 2015.

The Obama administration's decision late Tuesday to postpone the requirement for employers with 50 or more workers to offer health coverage or risk fines has satisfied some key members of the coalition that supported the law.

But the one-year reprieve also raises new questions about the administration's ability to get the huge health law up and running in an orderly fashion. The deadline for the new health exchanges to begin enrolling individuals is Oct. 1.

The announcement that the employer provisions would be delayed came in a blog post on the Treasury Department's website.

"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," wrote Treasury Assistant Secretary Mark Mazur about long-delayed rules to guide employers in reporting voluminous amounts of information about the insurance they provide to their workers.

But in delaying the reporting requirements by a year, Mazur wrote, "we recognize this transition relief will make it impractical to determine which employers owe shared responsibility payments."

What does that mean? It's a reference to the part of the law that requires employers with 50 or more workers to pay fines if they fail to provide adequate insurance and some of their workers end up claiming federally subsidized coverage in the health exchanges.

The administration delayed that requirement — or at least won't enforce it — for a year as well.

Business groups hailed the decision as a pragmatic one.

"It is welcome relief that the Administration took this step, particularly in light of the numerous questions that remained in terms of how companies were supposed to comply with the employer mandate provisions that were originally set to take effect next year," said Gretchen Young of the ERISA Industry Committee. "We do appreciate the sensitivity of the Administration to our concerns and hope that it will carry forward into other difficult issues as well."

The change, however, doesn't affect the requirement that individuals have coverage starting Jan. 1, 2014. "We are full steam ahead for the Marketplaces opening on October 1," Valerie Jarrett wrote separately on the White House blog Tuesday night.

But critics aren't so sure.

"The ObamaCare Train Derails," crowed the headline on a news release from the Republican National Committee, which goes on to note that "the delay marks another 'significant setback' for Obama."

Douglas Holtz-Eakin, head of the American Action Forum and a longtime critic of the health law, noted that delaying the employer requirements could have the effect of pushing more people into the health exchanges, and because many will qualify for federal help that will make the law more expensive for taxpayers.

"At a minimum, the federal revenue from the fines is gone," he wrote. "More realistically, the costs of already-bloated insurance subsidies will escalate and the red ink will rise."

Meanwhile, delaying the employer provisions through the 2014 election year could have one politically beneficial aspect for the administration, noted Jackson Hewitt Tax Service: "This one-year respite may make employers (e.g., restaurant and retail establishments) less likely to reduce employee hours below 30 hours per week."

Fines apply only for full-time workers, and full-time status is defined in the law as being 30 hours or more. The news has been full of stories of companies cutting workers hours back to stay below the 30-hour threshold as the deadline approaches.

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