Yesterday in a surprise move the Obama administration announced they are delaying the Affordable Care Act’s employer mandate until 2015. This will conventionally put the implementation of the provision off until after the next congressional election. From the Treasury:
Over the past several months, the Administration has been engaging in a dialogue with businesses – many of which already provide health coverage for their workers – about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.
The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it 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.
The employer mandate, a critical part of the law, is meant to prevent employers from deciding to dump their employees onto the new exchanges. Otherwise, there would be a significant increase to the price tag of the new law.
The idea is that without the mandate some employers might stop offering coverage if the exchanges appear to be a viable alternative for the employers. This was always seen as a long term problem. Since most companies would probably want to wait to see if the exchanges actually work before making such a big move, a one year delay for technical reasons shouldn’t create too many problems.
Of course the bigger problem is that the employer mandate is poorly designed. It is possible the administration isn’t delaying for technical reasons, but is simply trying to kick the can down the road until they get a Congress willing to fix the problem. If that is the case then we would have a more serious problem.