Why the Obama Administration Can't Win on Health Care

Margot Sanger-Katz

The Obama administration had been absorbing constant political attacks about the so-called job-killing nature of Obamacare, with its complex employer reporting requirements and fines for large companies that don't offer their workers insurance. But when it announced Tuesday that it would delay implementation of the employer mandate to give businesses more time to prepare, the attack lines simply shifted from arguments about policy merit to those about the administration's competence.

Republicans used the decision to amp up their calls for repealing the law, sounding as bullish as ever that the Affordable Care Act was inevitably flawed.

It shows that when it comes to the health care law—the president's signature legislative accomplishment—the administration can't win.

The White House appeased an angry business community with its decision to postpone a requirement that large employers offer their workers health insurance or pay a fine. The rule had angered even businesses that already insure their workers. It gave Republican opponents ammunition to attack the law, claiming it slowed economic growth. Its delay is likely to quiet some of those particular critiques, at least until after the 2014 election.

But the decision will still be politically useful to the health care law's political foes, who are now painting the administration as incompetent. A flood of press releases Tuesday night described the law as "unworkable," its implementation a "train wreck," and the delay as evidence that all of Obamacare should be taken off the books. "This is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it," said House Speaker John Boehner in a statement.

Congressional Republicans share responsibility for any unworkability of the law's employer requirement. It's a provision that could have been changed or even repealed if the law wasn't so toxic and partisan. The business community had been rallying around a series of modifications, including a recent bill that would have increased the threshold for full-time work from 30 hours a week to 40. But with Obamacare a perennial election-year issue, many lawmakers see an advantage in any failure of the law, and are reluctant to take any vote to "improve" it. The ability to portray the law as stifling to business and hiring was a useful one that few politicians were eager to give up.

As the administration's decision demonstrates, the employer mandate can be jettisoned next year without imperiling the law's biggest changes to the health insurance system.

The two largest and most visible changes the law will bring will move forward on time, administration officials have said repeatedly. New health insurance marketplaces will be open for business as advertised in October, promises the administration's top insurance regulator every few days. And the critical but unpopular requirement that individuals obtain insurance will also kick in next year. Final regulations on how it will work were just released last week.

Several economists have looked at the effects of the employer requirement, and found very little impact on how many businesses will offer insurance—or how many workers will get it.

To put the delay in perspective, the decisions by states not to expand their Medicaid programs mean that millions more Americans will go without insurance next year. The employer mandate was expected to have "essentially no effect" on the number of people covered by their companies, according to a 2010 Rand analysis. Rand concluded that large employers would be motivated by their employees' demands more than the prospect of a financial penalty if they failed to offer insurance. The provision never applied to small businesses. (There will still be kinks to be worked out, as Washington and Lee Professor Timothy Jost points out in a Health Affairs blog post, but they won't be fatal to the law's overall structure.)

Employers have been complaining that the rules for compliance are complicated, and that the Treasury Department has been late in publishing them. Those are legitimate concerns, said Larry Levitt, senior vice president at the nonpartisan Kaiser Family Foundation. "Even among very large employers that already offer coverage, many of them had been scrambling to understand the rules and figure out how to comply," he said. "So I think giving employers another year to be more deliberative in their decision making will definitely ease the transition." Treasury's own explanation of the decision was that it was responding to the concerns of the business community. And several business groups that typically oppose the health law cheered the decision.

"We applaud the administration for responding to our repeated requests to provide relief from the implementation of the Affordable Care Act," Steve Caldeira, president of the International Franchise Association, said in a statement. "This will relieve the onerous and costly burdens of the ACA for one year, and allow the administration to reexamine its implications for small businesses."

But the new attack line is still likely to fit into overall Republican critiques of the health care law: that it is too massive and poorly written to be practical. The inevitable hiccups in the early months of the law's implementation—what President Obama has called "glitches and bumps"—will also fit neatly into this narrative of government overreach.

That's the risk for the White House: that discussion of the policy merits of the employer mandate will succumb to the opposition's argument of the law's unwieldiness.