The Obama administration has decided to delay the implementation of Obamacare’s employer mandate—the requirement that all firms with 50 or more employees offer health coverage, or pay steep fines—until 2015. The mandate was supposed to go into effect on January 1, 2014. This development will have a significant impact on the rollout of Obamacare, the private health insurance market, and the nation’s economy.
The ruling, they say, “will come in regulatory guidance to be issued later this week. It addresses vehement complaints from employer groups about the administrative burden of reporting requirements, though it may also affect coverage provided to some workers.”
“First,” wrote Treasury official Mark Mazur in a statement, the delay “will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees.”
Will more employers dump coverage if the mandate is delayed?
As a matter of background, Section 1513/4890H of the Affordable Care Act requires that all firms with more than 50 full-time-equivalent employees—defined as 120 hours per month—offer government-certified health coverage to their workers, or pay a steep fine. For more details on how the mandate works, and how it incentivizes firms to offer “unaffordable” coverage to their workers, read mypiece on the topic from May 21.
In the short term, the delay will have several effects. First, the mandate drives up the cost of labor, and therefore increases unemployment; delaying the mandate by one year may modestly mitigate that disincentive.
Most importantly, the delay of the mandate means that more people will want to enroll in Obamacare’s subsidized insurance exchanges. Every year, fewer and fewer employers offer health coverage; given one more year to restructure their workforces, this process could accelerate.
Excerpt from Forbes.com (http://www.forbes.com/sites/theapothecary/2013/07/02/white-house-to-delay-obamacares-employer-mandate-until-2015-far-reaching-implications-for-the-private-health-insurance-market/)