The Obama administration is postponing the federal health care law’s insurance mandate for employers next year, in a major concession to the business community and lawmakers who have become increasingly vocal about the law’s potential to damage a slowly recovering economy.
The announcement doesn’t affect the main coverage tools in the law — the individual mandate and the new subsidized insurance markets. But it could boost the cost of the law if more people end up seeking subsidies instead of getting covered on the job.
The delay, revealed just as the administration was stepping up efforts to educate the public about enrollment this fall, is at least partial proof of what Republicans have been predicting for months: that the health law is way too complex to be ready to go live in 2014. And that’s a message that may well resonate all through next year - including the 2014 midterm elections.
Those GOP critiques picked up immediately.
“Obamacare costs too much and it isn’t working the way the administration promised,” Senate Republican Leader Mitch McConnell (R-Ky.) said after Treasury announced the one-year delay. “And while the White House seems to slowly be admitting what Americans already know, and what I hear consistently in my travels around Kentucky regarding the regulatory burden on employers, the fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans.”
Speaker John Boehner’s press secretary Brendan Buck tweeted simply: “Obamacare. Such a train wreck.”
“Absolutely thrilled by #ObamaCare delay,” Republican operative Brad Dayspring tweeted. “Will help #GOP candidates across the board in 2014. Debate will be a repeat of 2010.”
The Treasury Department, which is in charge of the employer mandate, said it recognized that the steps businesses have to take to show they were complying with the rules were complex and a burden. Treasury said it would try to streamline them over the next year.
There will be no penalties in 2014 for businesses that don’t cover workers. Most large businesses do cover their workers. Small businesses, with fewer than 50 workers, were already exempt from the rule.
The delay was announced as Washington was already emptying for the July 4 holiday. It comes in the shadow of a mounting pile of criticisms of the employer mandate. There’s been a push by some business groups and lawmakers so that only people workig 40 or more hours a week would be covered. The health law currently says 30 hours is full time, and some businesses and more recently, school districts, have complained that they would have to cut their employees hours to escape the mandate penalties.
The move is also likely to raise the prices tag of Obamacare by making more people eligible for subsidies, namely those whom employers would have covered under the threat of penalties under the law. Employers with 50 or more “full-time equivalent” employees were required under law to provide affordable insurance or else pay $2,000 per year penalty per employee.
The employer mandate’s penalties were expected to reduce the deficit by $5 billion in 2014, according to a Congressional Budget Office estimate published in February.
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