Businesses, insurers, insurance brokers — and politicians — scrambled Wednesday to understand the full implications of a one-year delay in an important part of Obamacare — the requirement that most businesses provide insurance for their workers.
Many said they were stunned by Tuesday’s announcement that businesses with 50 or more workers would not be penalized for missing a 2014 deadline for providing that coverage.
But opponents of the Affordable Care Act eagerly seized on the delay to urge another step: Repeal the entire law.
“Obamacare is not ready and is not what was promised to Americans,” Sen. Pat Roberts, a Kansas Republican, said in a statement. “This latest delay … is bound to ensure Americans will face yet more problems and higher costs across the health care spectrum.”
Roberts and other Republicans also pointed out that the delay stretches some of the business impact of Obamacare beyond next year’s midterm elections.
A tweet from Sen. Roy Blunt, a Missouri Republican, called the delay “a clear admission the law is unworkable & costs too much.”
The White House stayed generally mum Wednesday. The law’s other supporters said the delay in the employer mandate would affect only a small part of the workforce. Most companies that now provide worker coverage are expected to continue to do so.
And the more significant parts of the act — online health care exchanges, where subsidized insurance can be competitively purchased, and the individual mandate requiring everyone to have insurance — are still untouched, at least for now. The exchanges are supposed to be ready Oct. 1, and the individual mandate is supposed to be effective in 2014.
Though this week’s announcement is “a breather for a handful of companies,” said Denise Mills, senior principal at Willis Human Capital Practice in Overland Park, “everything else, as far as we know, is still on the table.”
Wayne Powell, chief of staff at Blue Cross and Blue Shield of Kansas City, said his firm was in a “wait and see” mode.
“For employers, the delay gives a lot of relief over the next year to sort through the nuances of the law,” he said.
Indeed, businesses generally applauded the extra time.
“Anxiety about the Affordable Care Act is high among employers, so any relief is welcome,” said Joe Trauger, vice president of human resources policy at the National Association of Manufacturers.
Retailers, staffing firms, hospitals and other employers with large numbers of part-time employees appeared most appreciative.
“The one-year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment,” said Neil Trautwein, vice president and employee benefits policy counsel with the National Retail Federation.
But critics said the one-year demise of the employer mandate could put the entire Obamacare structure in jeopardy. The act generally requires all Americans to buy health insurance beginning next year or pay a sliding tax penalty.
“It’s going to be really hard to impose the individual mandate without an employer mandate,” Katie Mahoney, executive director of the U.S. Chamber of Commerce, told Reuters. “And if you cut that, you could see the whole thing start to unravel.”
Others said the delay in the business mandate will cause headaches for workers trying to navigate the new insurance world next year.
In general, employers with 50 or more full-time workers — now defined as those who work 30 hours a week — would have been required to provide affordable health insurance plans or pay a penalty of $2,000 per full-time employee. That penalty is now delayed.
Some of that money was supposed to help subsidize individual insurance purchases on the exchanges, experts pointed out. The penalty was projected to bring in $10 billion next year, money that the government may now have to find elsewhere.
Jon Gruber, a Massachusetts Institute of Technology economist who helped design the federal health law, said the decision to forgo the $10 billion in penalties was both pragmatic and political.
“Basically, it was their judgment that it was causing too many logistical and political headaches and it wasn’t that essential to the law, so they decided to just delay it a year and live with the revenue loss,” Gruber said Wednesday.
In the Kansas City area, Mark Avery, chief executive of the insurance broker Power Group, said, “The immediate reaction from everyone is, ‘What’s next? What does this do to the individual subsidy?’”
Other critics said the one-year delay could give companies more time to decide to drop insurance, leaving more Americans uncovered. The tax penalty, now payable in 2015, is still far lower than insurance premiums for most employers.
But most employers were more focused on more practical concerns, one reason the delay was relatively popular.
Calculating coverage responsibilities has been challenging for retailers and similar employers, said Scott Behrens, a health care attorney at the Kansas City law firm of Husch Blackwell.
“There’s a complicated formula to figure out who works 30 hours a week,” Behrens said. “It requires looking back over time and averaging hours.”
The delay also gives more time to figure out, for example, if adjunct professors at colleges and universities are considered full-time workers, he said.
“Clients have expressed quite a bit of fear that they need to start covering adjuncts,” Behrens said. “We’ve had no answer to that yet. Clients are trying to figure out what counts as a reasonable method to gauge hours. This delay may give regulators time to come out with guidance on that and other points.
“One big thing that’s come up is that some employers already have sent out communications to employees saying they’ll offer health insurance in 2014, and now they don’t know if they have to abide by those communications.”
Obamacare critics also said the law, as written, was a disincentive for employers to hire employees if they were verging on a 50-employee head count. They also pointed out that it was an incentive for employers to cut part-time workers’ hours to stay under the 30-hour-a-week definition — a decision that hurts employee pocketbooks, particularly those of low-wage workers.
Avery, at Power Group, said only one business client had spoken with him Wednesday morning about being affected by the moratorium.
“The majority of clients in the large group space will continue to buy coverage for their employees, but for some industries the delay is a huge relief,” Avery said.
Powell, at Blue Cross and Blue Shield, emphasized that it’s too soon to know exactly how the delay for businesses’ pay-or-play mandate will affect the rest of the Obamacare implementation.
“The interplay between the employers with 50 and above employees — who are not now required to provide insurance — and the impact on their employees if the individual mandate stands is a great question,” Powell said. “It’s a very important question that still needs to be answered.”