What’s behind the delay in implementing the employer mandate and what it means

The Treasury Department on July 2 announced a one-year delay in the employer mandate under the Affordable Care Act.

I had just been gathering a whole bunch of material to explain to AHCJ members what employers do and do not have to do under the health law – some of which we’ll put aside for now as it’s going to change in the coming months as the rules get revamped for 2015. But it’s still important to make a few general points as this issue isn’t going away.

One thing you will hear a lot – a whole lot – from critics of the health reform law is that the mandate is killing small businesses. The first thing you should ask is “How are you defining small business?” Because businesses with 50 or fewer workers DO NOT have to cover their workers. Not this year. Not next year. They are not part of the employer mandate. Period.

Those small businesses that choose to purchase or subsidize worker coverage can do it the way they are now – buying a small group policy. Or they can go into the new SHOP health insurance changes for new options. (Those exchanges are not going to be as robust as the law’s backers hoped in the first year – we’ll return to that topic soon.) Depending on their size and the wages they pay, they may even be able to qualify for a tax credit to offset up to half of the coverage cost. In Vermont next year and in Washington, D.C., in 2015, small businesses will have to go through the exchange, there will be no alternative.

For larger businesses, on one level, the employer mandate wouldn’t change coverage levels all that dramatically. Most businesses – 94 percent of those with 51 to 199 workers, and 98 percent of those with 200 or more – already cover workers, according to a Kaiser Foundation survey released in December 2012. And they probably won’t rush to drop workers – particularly if they’d just have to resume worker coverage in a year. Politically this is a big deal – but in terms of coverage, there will be winners and losers but overall it’s going to be more or less a coverage wash a year from now. Here’s the Urban Institute report on that. Some conservatives think it will be more disruptive of coverage, an argument made by former Congressional Budget Office director Doug Holtz-Eakin.

But not all businesses cover all of their workers (think of part-timers, seasonal workers, temps, etc.) and not all of them have health benefits that live up to the new law’s affordability and benefits rules.

It was those rules and the related reporting requirements and data collection that led to this delay. The new rules were specific, complicated and burdensome, businesses said. The Treasury hadn’t even finalized them. So it gave itself another year to do so, with more stakeholder input.

So what does this mean? A lot more complaining from conservatives about the law being too complicated to implement. A lot of speculation about what else could be delayed – because the employer mandate was not the most complicated nor the most controversial aspect.  But it also may mean a bit of a pause in the story line about the burden Obamacare was placing on small business and its workers.

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