Economix Blog: Putting Off the Employer Mandate

Jared Bernstein is a senior fellow at the Center on Budget and Policy Priorities in Washington and a former chief economist to Vice President Joseph R. Biden Jr.

Well, I didn’t see that coming.  The Obama administration announced Tuesday afternoon that it was going to delay an important part of the Affordable Care Act for one year.  The rule requiring employers with at least 50 full-time workers to provide them with coverage or pay a penalty (also known as the employer mandate) will now be enforced starting in 2015, not 2014 as originally planned.

Here’s a very brief look at why, what, and what it means.

Today’s Economist

Perspectives from expert contributors.

A Treasury official published a blog post explaining that officials decided to give businesses more time to comply with the reporting requirements.  As The Times reported:

“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Mark J. Mazur, an assistant Treasury secretary, wrote on the department’s Web site in disclosing the delay. “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.”

Though the mandate will ultimately affect only a few employers, it is actually an important piece of the law’s architecture.  Without it, employers who currently provide coverage to their workers could drop the coverage and send their workers over to the state health care exchanges.  And since some of those employees would be eligible for subsidies to help defray the cost, the employer would be shifting what is now a private cost over to the government.

The penalty for such actions was supposed to kick in next year; now they’ll kick in the year after next.  The government needs a bunch of information from businesses to determine if the penalty is warranted, and the White House is now saying that putting that reporting process in place is going to take longer than expected.

How will this affect coverage?  Hard to see it having much impact at all.  The important coverage aspects of the Affordable Care Act — the Medicaid expansion and the state health care exchanges — are still scheduled to be up and running by Oct. 1, the beginning of the fiscal year (of course, not every state has accepted the Medicaid part). And the requirement to have health insurance or pay a penalty – the individual mandate – will still take effect in 2014.

And a vast majority of employers with at least 50 full-time workers — about 95 percent — already offer coverage to the workers.  With the exchanges going up, there’s a chance some employers could try to pull off the cost shift noted above, but the mandate will be in place by 2015, so we’re unlikely to see much of that.

At least one report suggests a budgetary cost from the delay, since the revenues from penalties would flow to the Treasury Department.  But a colleague who tracks this stuff very closely tells me that while the Congressional Budget Office earlier this year scored this part of the bill as providing $5 billion to the Treasury next year, its most recent score dropped that to zero.  The budget office appears to have wisely assumed it was already going to take a while to get this part of the system up.

So, no budget cost, little impact on coverage.  Is this delay just not a big deal?

Um … this is Washington, folks, and we’re talking Obamacare.  There will be much hay made of this delay in coming days.  Conservatives will argue that this confirms that the law is unmanageable — which is a bit rich, since many of them have been trying to kill it, block it, and stop it in its tracks. (Speaker John Boehner’s press secretary, Brendan Buck, on Twitter: “Obamacare. Such a train wreck.”)  Liberals may argue that the administration is caving to business, which just wants to put off the paperwork for a year.

I think it’s an unfortunate delay of an important but relatively small piece of the bill, more growing pains of the type I’m sure Medicare had when it got going than anything existential. But that’s not how it will play in the hurly-burly of the next few days of Washington politics.

Article source: http://economix.blogs.nytimes.com/2013/07/02/putting-off-the-employer-mandate/?partner=rss&emc=rss