The move does not affect the individual mandate. Obamacare rule for business delayed

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.

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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in my travels around Kentucky regarding the regulatory burden on employers, the fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans.”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.”

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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 working 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.

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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.

But not only will the government lose the revenue for the penalties, it may also have to pay more in subsidies.

Most larger employers provide health insurance to remain competitive. But the delay means that they have the option — at least temporarily — of cutting coverage of employees and having them seek coverage on the exchange instead. The mandate in part was meant to stop exactly that.

“Essentially for calendar 2014 the act of dropping coverage and dumping employees into the exchanges is on sale,” former Congressional Budget Office Director Douglas Holtz-Eakin said. “Drop and dump, but no penalty. Accelerating the rush of employers to the exits is bad news for taxpayers. At a minimum, the federal revenue from fines is gone. More realistically, the costs of already-bloated insurance subsidies will escalate and the red ink will rise.”

But the employer mandate is required by the law, leading some critics of the administration to question whether the Treasury even has the authority to delay its enforcement. And the administration made clear Tuesday that it planned for the mandate to be in place in 2015, meaning any company that drops coverage next year would have to restore it the next year or face those penalties.

Those who had been pressing for adjustments to the requirements were relieved by the decision.

“We applaud the Obama Administration’s decision to delay until 2015 employers’ reporting requirements, and potential employer penalty payments under the Affordable Care Act,” James A. Klein, president of the American Benefits Council, said in a statement. “This provides vital breathing room to implement the law in a more thoughtful and administrable way.”

He said the delay “will minimize disruption for employers and their workers.”

The decision may assuage employers’ immediate concerns, but it will effectively extend the wrangling over the requirements through all of 2014, as employer groups continue to lobby the administration and Congress about the changes they want made.

The administration had hoped that the law would have been fully in place – and have begun to demonstrate its benefits in time for the 2014 midterms. Instead, some Republicans are already looking forward to having Obamacare as live an issue as its ever been.

“A delay - conveniently past the 2014 election - only adds to the uncertainty these job creators face because of Obamacare,” said Sen. Orrin Hatch.

The delay could also complicate a series of lawsuits. Many have been filed against the health law’s requirement that employers provide coverage of contraceptives. And another suit was filed challenging the how tax subsidizes can be handled in states that don’t set up their own exchanges. Both rely in part on the employer mandate. The courts could say that the lawsuits should be put on hold until the employer mandate is fully in effect.