Temporary time-out for part of Obamacare

The news from the Obama administration late Tuesday surprised nearly everyone: The employer mandate in the Affordable Care Act, aka Obamacare, will be temporarily suspended. Now, businesses with 50 or more employees won’t have to offer health insurance to their employees or face steep fines until Jan. 1, 2015, rather than Jan. 1, 2014.

Readers may choose their explanation and analysis of this unexpected action from the list below. But whatever the reasons for the temporary delay, we believe it will add one more year of uncertainty and confusion for businesses attempting to plan their workforce size and benefits package for the future.

That means more drag on the economy as companies eager to expand hold off for another year to see what changes the 2014 elections bring, and whether more delays may be in the offing.

There is also uncertainty for individual insurance purchasers, who are supposed to start buying insurance from state or federal insurance exchanges Oct. 1 if they don’t have health insurance through their employer.

Is their a possibility the individual mandate will also be delayed, as some people are advocating? Even if they have employer insurance now, should people buy insurance through the exchanges this year on the chance their employers might drop insurance next year? Will their employers cut the number of full-time employees to get under the 50-worker threshold of the mandate?

These are significant questions that, no matter the reason for the delay, suggest it will have a troubling impact on the economy. Here are some of the possible reasons for the postponement of the employer mandate, as suggested by observers across the ideological spectrum.

✔ It was a crass political move, designed to insulate Democrats running for Congress next year from the business and consumer anger that many expect to see when the plan is fully implemented (see cartoon at right).

✔ It is a logical delay, enacted to give the administration and states time to get the health care exchanges fully operational prior to tackling the difficult task of ensuring that all businesses with more than 49 workers meet the insurance mandate.

✔ It is an indication that Obamacare really is a train wreck waiting to happen, and evidence that the 2010 law can never be fully implemented as it was written.

✔ It is an appropriate response by the White House to the concerns it has been hearing from business groups, which are anxious about how the mandate will work.

✔ It is a de facto admission by the president that the mandates won’t work and could seriously harm the economy (see column below).

Regardless of which explanation you accept, there is no doubt Obamacare will continue to be a political hot potato through the next general election, and a cause of continuing uncertainty for businesses and individuals.


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Kudos to the Sentinel’s editors for preemptively debunking (“Temporary time-out for part of Obamacare”) the partisan poppycock of columnist Josh Penry (“President’s retreat on Obamacare shows big government doesn’t work”) and local lemming Dave Kearsley (“Dems want to celebrate only “Dependence Day’”).

As the Sentinel explained, explanations for delaying the “employer mandate” provision of ObamaCare range from the conspiratorial to the straightforward – encompassing both Penry’s and Kearsley’s prematurely expectant glee that a one-year delay in enforcing an administratively cumbersome provision presages the impending “train wreck” so eagerly sought by Republicans and promoted by their cynical attempts at repeal and/or sabotage. 

The “employer mandate” in Richard Nixon’s (1974) and Bill Clinton’s (1994) health care proposals compelled employers to pay for employee health insurance.  The “employer mandate” in “Romney-care” and now “ObamaCare” imposes a nominal “penalty” on some employers for not doing so ($2000 to $3000 per employee per year, versus annual insurance premiums averaging $16,000 per employee)..

Because all employers with 200+ employees already provide health insurance plans, only employers with 50 to 200 employees are subject to the “penalty”.  Because 95% of those employers currently provide health insurance plans (which may or may not comport with the minimum specifications of the Affordable Care Act), only some 5% of those “smaller businesses” would be affected by the “penalty”.

The administration’s decision to delay this provision in response to legitimate concerns “shows that [the Republican-controlled Congress] doesn’t work” – because it won’t even consider proposals intended to improve ObamaCare and/or facilitate its implementation.

Indeed, some Democrats would eliminate the “employer mandate” entirely—by allowing employers to convert health insurance premiums to commensurately increased wages and salaries, thereby freeing employers from that administrative and financial burden while enabling their newly “independent” employees to purchase their own personalized plans from ObamaCare’s health insurance exchanges.

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