In a stunning development, the Obama administration announced on Tuesday it is going to delay the implementation of the employer mandate, a major aspect of President Obama’s health care law initially set to go into effect on Jan. 1, by a year.
In a blog post, the Treasury Department wrote that it has been in talks with businesses about the implications of the mandate and has decided to delay implementation to provide them with more time to adapt to the requirement. The news was first broken by Bloomberg reporters Mike Dorning and Alex Wayne.
There are a number of major implications for politics and health policy stemming from this decision to delay the mandate until 2015.
To start, the purpose of imposing a $2,000 (or $3,000) penalty per worker on businesses with over 50 employees which did not offer acceptable health coverage was to discourage businesses from dropping coverage in response to the health care law and dumping their workers on new government-run exchanges. But absent that penalty, will more businesses now be motivated to drop their current coverage?
Also, the delay is said to be one year, but if business lobbyists were successful in convincing the Obama administration to delay it for a year, will it actually ever go into effect? Congress routinely votes to delay scheduled cuts in physician payments under Medicare. Will this be the same sort of policy, that exists on paper, but never gets implemented?
Politically, the decision smacks of the Obama administration wanting to defer the impact of the law on businesses during the 2014 midterm election year, avoiding headlines about businesses cutting staff levels or reducing worker hours to get around the mandate. But it could also be politically dangerous, by reinforcing the idea that the law is a looming train wreck. Republicans can now also run on an argument that if voters elect them, they’ll prevent this horrible policy — so horrible that even the Obama administration had to delay it for a year — from ever going into effect.
Notably, the administration said it would release updated regulations reflecting the new policy later this week, during the July 4th period when most Americans have the holiday on their minds.
Avik Roy raises another issue, which is that the law states that, “The amendments made by this section shall apply to months beginning after December 31, 2013.” Practically, the question is, even if delaying the mandate is beyond the power of the executive branch, what groups would sue the Obama administration to implement it on time? What is the constituency for the employer mandate? Either way, it is pretty ironic that defenders of the law have been criticizing opponents of the legislation for undermining implementation, and yet now Obama is simply ignoring parts of the law that are inconvenient.
Note: This item was updated from an earlier post to reflect the Treasury Department statement and add the discussion of the legal implications of the decision.