CBO Says Delaying Employer Mandate Will Cost U.S. $4B in 2014
The Obama administration's decision to delay the Affordable Care Act's employer mandate will cost the federal government billions of dollars in employer penalties in 2014, according to the Congressional Budget Office, USA Today reports (Kennedy, USA Today, 7/3).
Under the provision, employers with at least full-time 50 workers must provide affordable health coverage or face a $2,000 fine per worker after the first 30 employees. However, in a pair of announcements posted last week on the White House blog and the Department of Treasury blog, administration officials said the employer coverage mandate will be delayed until 2015 to provide businesses with more time to comply with its reporting requirements (California Healthline, 7/3).
The CBO estimates that the decision means the federal government will not collect about $4 billion in employer penalties in 2014 (USA Today, 7/3). In 2015, the CBO estimates that figure will increase to about $10 billion.
Further, many health policy experts have noted that the decision could raise federal costs by increasing the number of low- and moderate-income individuals who will seek federal subsidies to purchase coverage through the law's health insurance exchanges, as opposed to getting coverage through their employer.
Roger Feldman, a professor of health insurance at the University of Minnesota, called the decision "counterproductive." He said the decision likely will result in an increase in the number of uninsured U.S. residents (Pugh, Miami Herald, 7/3).
Sharon Stiller -- head of employment law at Abrams, Fensterman -- said the decision provides businesses with more time to decide if they should scale back their force to avoid the mandate or make internal policy changes, such as changing their definition of a "full-time employee." Stiller also noted the delay could prompt some businesses to push for another extension next year (USA Today, 7/3).
However, White House officials last week insisted the delay was final and would not be extended (Alonso-Zaldivar, AP/Boston Globe, 7/3). According to The Hill's "Healthwatch," a second delay is unlikely because the federal government needs the revenue from the employer penalties to help pay for the law (Baker/Lillis, "Healthwatch," The Hill, 7/4).
Employer Mandate Affects Few Businesses
Despite the Obama administration's decision to delay the employer mandate until 2015, research shows few businesses would have been affected by the requirement, National Journal reports.
Census data show businesses with 20 to 99 workers account for less than 9% of all employer firms. Among those businesses, most already offer employees affordable coverage, according to National Journal. The Kaiser Family Foundation employer benefits survey found about 87% of employers with 25 to 49 workers and 94% of companies with 50 to 199 workers offered coverage in 2012 (Chokshi, National Journal, 7/3).
Delay a Harbinger, Some Say
A number of observers noted that the employer mandate delay could indicate the ACA is at risk of further delays, the Washington Post reports (Balz, Washington Post, 7/3).
Speaking on the condition of anonymity, some federal officials said the administration could authorize delays or tweaks to other ACA provisions. According to the AP/Boston Globe, the law's health insurance exchanges -- which are scheduled to open Oct. 1 -- are "most vulnerable" to such changes (AP/Boston Globe, 7/3).
William Galston of the Brookings Institution noted that compared with other provisions in the bill, the employer mandate was expected to be less of an administrative challenge. Galston said, "Its postponement raises troubling questions about many others -- especially the exchanges." He added, "If -- against the odds -- the remaining features of the bill are implemented relatively smoothly, it will go down as a 'strategically shrewd decision.' If not, it will be the equivalent of blood in the water. And the sharks are hungry" (Washington Post, 7/3).
Robert Blendon of the Harvard School of Public Health suggested the decision could prompt the Obama administration to delay the law's individual mandate. "The big question now is whether they're still going to require individuals to pay a penalty if they don't obtain coverage, if they're not going to require it of businesses," Blendon said.
Katie Mahoney, executive director of the U.S. Chamber of Commerce, said, "It's going to be really hard to impose the individual mandate without an employer mandate." She added, "And if you cut that, you could see the whole thing start to unravel."
However, the Obama administration has said publicly that it is not considering delaying the individual mandate (Morgan, Reuters, 7/3).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.