Obama Administration Delays Health Insurance Mandate For Employers Until 2015

July 3, 2013  |  

In a sudden announcement, the Obama administration said late yesterday that the employer insurance measure, a key part of the Affordable Care Act, will be delayed one year. The decision came amid outcry from businesses and business groups like the National Retail Federation, who feared the new mandate could slow recovery in a still struggling economy. Politico reports the change won’t alter the individual coverage or the subsidized market, but it could drive up the cost of the Obamacare plan if more people end up using subsidies rather than signing up through their employers. Others, including private businesses and school districts have said they’re going to have to cut staff in order to avoid paying penalties. Anyone working 30 hours or more should be covered.

The penalties were meant to pay for the deficit. But if more people sign up for the subsidy, it will actually end up costing the government.

Republicans immediately sprang on the news, saying it confirmed what they believe: that the healthcare law is too complex and too expensive. Speaker of the House John Boehner called it a “train wreck.” Of course, this delay means the debate about the program will continue for another year, through midterm elections. House Republicans have already tried to repeal the law 37 times.

In a post on the White House blog, Valerie Jarrett points out that 6.9 million private sector jobs have been added in the past 39 months and most people get health insurance through their jobs. She highlights two changes that are already being made in response to the feedback they’ve heard: “First, we are cutting red tape and simplifying the reporting process.” And [s]econd, we are giving businesses more time to comply.” The Health Insurance Marketplace will open as planned on October 1 and HealthCare.gov will be the place for additional healthcare information.

Most large businesses already cover their employees. And small businesses with fewer than 50 employees were exempt. But the Treasury Department, which administers the program, will go about making it easier for companies to show that they’re complying with the law.

Mark Zandi, chief economist at Moody’s Analytics, tells US News & World Report that a certain amount of hiring slowdown was expected as the Affordable Care Act went into effect, but it’s actually been less than expected. Others, including analysts at the Economic Policy Institute, which is left-leaning, say that the confusion is being overstated. Nevertheless, the goal is to make sure everything goes smoothly.

“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,” said Mark Mazur, assistant Treasury secretary for tax policy, in a post on the IRS blog.

Some parts of the law have already gone into effect, USA Today notes. Among them, the rule allowing children under 26 to stay on their parents health insurance and prescription drug discounts for Medicare patients. “More young Americans have health insurance than before the law, because of that change, and the discounts have saved Medicare recipients billions of dollars,” the newspaper says.

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