After months of conferring with fretful employers, the Obama administration announced Tuesday that it will delay enforcement of the Affordable Care Act’s so-called “employer mandate” until 2015.
A signature provision of the federal health care overhaul, the contentious measure would have required firms with more than 50 full-time employees to provide affordable health insurance or face a penalty of $2,000 per employee in 2014, when the law was set to be fully implemented.
Ninety-six percent of U.S. businesses have fewer than 50 employees and are already exempt from the mandate. The nonpartisan Kaiser Family Foundation estimates that 94 percent of firms with 50 to 199 employees already provide coverage – as do 98 percent of firms with 200 or more workers.
But those numbers don’t tell the whole story. Employees who work 30 or more hours per week are considered “full time” under the law. But one-third of nearly 900 employers surveyed last month by the health care consulting firm Mercer don’t offer coverage to those employees.
These businesses and those with workforces hovering near the 50-employee threshold faced a host of important financial decisions about their health plan enrollment that had to be made by October, when employees begin choosing their coverage for 2014.
The deadlines have left firms large and small scrambling for answers and somewhat bewildered by the red tape, potential costs and tax implications of the new provision. Hamstrung by funding shortages that have limited its outreach efforts, the Obama administration has not done a good job of explaining the legislation to employers.
In announcing the delayed enforcement of the employer mandate, White House special adviser Valerie Jarrett said employers needed more time to comply with the new rules, which require extensive reporting about the specifics of employees’ coverage in order to assess the penalties.
“As we implement this law, we have and will continue to make changes as needed,” Jarrett said in a statement. “In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening.”
The delay is the latest and most significant move by the Obama administration to slow enactment of the sprawling health care overhaul, which is seen as the major legislative achievement of the Obama presidency.
Although born of conservative ideology, the law has been opposed from the outset by Republicans and has only survived thanks to a surprising 2012 Supreme Court decision that upheld the law’s “individual mandate,” which requires that most Americans obtain health insurance or pay a penalty for noncompliance.
News of the decision to delay the employer mandate sparked unanimous praise from the business community.
“The administration has finally recognized the obvious – employers need more time and clarification of the rules of the road before implementing the employer mandate. . . . We applaud the administration’s step to delay this provision,” said Randy Johnson, senior vice president of labor, immigration and employee benefits at the U.S. Chamber of Commerce.
The National Retail Federation, which has called for the regulations to be delayed, was equally appreciative.
“The one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment,” said Neil Trautwein, the federation’s vice president and employee benefits policy counsel. “We appreciate the administration’s recognition of employer concerns and hope it will allow for greater flexibility in the future.”
Republicans on Capitol Hill weren’t nearly as gracious about the administration’s concession. House Speaker John Boehner called the law a “train wreck” that should be repealed.
“I hope the administration recognizes the need to release American families from the mandates of this law as well,” said Boehner, R-Ohio. “This 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.”
House Majority Leader Eric Cantor, R-Va., also called for the law’s repeal “before any more damage is done to our economy or the health care families depend on. The best delay for Obamacare is a permanent one.”
“Rather than continuing to delay the predictable pain until another election day has passed, we should scrap this entire law,” Cantor said.