Administration Delays Obamacare Employer Mandate

Margot Sanger-Katz

The delay of a major health reform provision means that employers won't be required to offer their workers health insurance next year. The complex and unpopular Obamacare requirement will now be implemented in 2015, after next year's election, the Treasury Department announced on Tuesday.

The decision is a relief to employers, which have been struggling to prepare for a series of new requirements next year. Under the health reform law, any business with 50 or more full-time workers would need to provide affordable health insurance to its workers or pay a fine. But the rules were complicated, and even businesses that currently insure their workers were complaining it would be tough to comply.

"We have listened to your feedback," Mark Mazur, the assistant secretary for tax policy wrote on the Treasury website. "And we are taking action."

Politically, the decision cuts both ways. The employer mandate was never very popular among business owners, especially in the retail and restaurant sector. This decision placates them for now and undercuts criticism that the law hobbles business.

But the delay, originally reported by Bloomberg, also allows Obama's critics to allege that the administration is falling down on the job of administering its health reform law. Christopher Jacobs, a senior policy analyst at the conservative Heritage Foundation, quickly posted on the organization's blog that the administration now "admits Obamacare's a job-killer."

It also does little to appease the Affordable Care Act's most determined political critics. House Majority Leader Eric Cantor, R-Va., didn't hesitate to use the news to renew calls for repeal. "This further confirms that even the proponents of ObamaCare know it will hurt jobs, decrease economic growth and make it harder for families to have access to quality and affordable health care. Rather than continuing to delay the predictable pain until another election day has passed, we should scrap this entire law and instead implement patient-centered reforms before any more damage is done to our economy or the health care families depend on," he said in a statement. House Speaker John Boehner's statement said the move was "a clear acknowledgement that the law is unworkable."

But despite the rhetoric, the practical effects of the delay may not be large. A 2010 RAND analysis of the employer mandate found that the provision would influence the behavior of very few employers. Most large employers already offer their workers insurance. And many who expanded coverage would do so in response to employee demand, not the fear of penalties, the study found.

"The employer mandate didn't end up having much "bite," says Christine Eibner, a RAND economist who worked on the analysis.

The law's biggest features will still roll out on time. Administration offiicals continue to say that new insurance marketplaces will be ready for people to sign up as scheduled on Oct. 1. And just last week, the administration issued its final rule on the requirement that individuals obtain health insurance, which means the law's most unpopular provision will kick in next year.