White House will postpone the ACA employer mandate by one year

Experts: The delay may represent a 'significant setback' for the ACA

Topics: Payer and Regulatory Policy, Market Trends, Strategy, Health Policy, Health and Wellness, Benefits, Labor Expense, Workforce, Health and Wellness, Benefits, Labor Expense, Finance

July 3, 2013

The Obama administration on Tuesday announced that it will postpone the Affordable Care Act's (ACA) employer mandate for one year in order to address concerns about its reporting requirements.

Employer groups welcomed the delay, but some observers called the move a "significant setback," the New York Times reports.

  • What it means. Industry experts—including the Advisory Board's Chas Roades—weigh in on the administration's surprising decision to delay the employer mandate and what it means for ACA implementation.

How the employer mandate works—and why lawmakers want to change it

Under the ACA provision, employers with at least 50 workers working 30 hours or more per week would have had to provide affordable health coverage or face a $2,000 fine per worker. As originally written, the mandate would have started in 2014.

However, some business owners have indicated that they plan to cap their employees' weekly work hours to avoid the mandate. Meanwhile, the mandate has spurred broad opposition from both Democrats and Republicans, but lawmakers have moved slowly to address it.

Breaking down the news: Why the White House will delay the mandate

In a pair of announcements posted late Tuesday on the White House blog and the Department of Treasury blog, officials said the employer coverage mandate will be delayed until 2015 to provide businesses with more time to comply with its reporting requirements.

The blog posts did not suggest similar changes will be made to the individual mandate, which is scheduled to take effect next year, according to the New York Times.

In the White House blog post, Valerie Jarrett—a senior adviser to President Obama—wrote, "We believe we need to give employers more time to comply with the new rules." She added, "This allows employers the time to… make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers."

Administration officials said the delay comes after the White House held talks with business groups over concerns about the reporting requirements. In addition, officials described the move as part of the administration's efforts to simplify or reduce regulatory red tape across government agencies, Bloomberg reports.

In the Treasury's blog post, Mark Mazur—an assistant Treasury secretary—wrote, "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."

Mazur noted that within the next week, the Treasury Department will issue official guidance to insurers, self-insuring employers, and other parties that provide health coverage, adding that formal rules would be proposed this summer.

However, Mazur said employers would be "strongly encouraged" to "maintain or expand health coverage," as well as comply with the law's reporting provisions in 2014, as originally mandated.

According to The Hill's "Healthwatch," the administration emphasized that delaying the employer mandate would not affect other aspects of the ACA, such as implementation of the health insurance exchanges and the individual mandate. In her blog post, Jarrett wrote, "We are full steam ahead for the [exchanges] opening on October 1."

Business groups welcome delay

The business community immediately welcomed the administration's announcement, according to news reports.

Randy Johnson—a senior vice president at the U.S. Chamber of Commerce—said, "The administration has finally recognized the obvious—employers need more time and clarification of the rules of the road before implementing the employer mandate."

ACA opponents question the law's readiness

However, some ACA opponents and Republican lawmakers used the delay announcement to highlight failures with the law, Kaiser Health News reports.

Amanda Austin—director of federal public policy at the National Federation of Independent Business—said the decision is "simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible," adding, "Temporary relief is small consolation."

House Speaker John Boehner (R-Ohio) in a statement said, "This announcement means even the Obama administration knows the 'train wreck' will only get worse." Boehner called on the administration to also delay implementation of the individual mandate and "release American families from the mandates of this law as well"

Meanwhile, House Oversight and Government Reform Committee Chair Darrell Issa (R-Calif.) questioned the administration's legal authority to delay the penalty. In a statement Issa said, "It is unclear that [Obama] has the authority to do this without Congress," adding, "This is another in a string of extra legal actions taken by his Administration to mask the horrible impact his law will have on the economy and health care in the United States."



Health experts express concern over implications for ACA, coverage

Health policy experts argue that Tuesday's decision could cast a shadow on the White House's assurances that the law is 100% on track for implementation and it could undermine U.S. residents' confidence in the law, the Washington Post's "Right Turn" reports.

Sara Rosenbaum—a professor of health law and policy at George Washington University and an ACA advocate—said, "I am utterly astounded," adding, "It boggles the mind. This step could significantly reduce the number of uninsured people who will gain coverage in 2014" (Calmes/Pear, New York Times, 7/2; Goldfarb/Somashekhar, Washington Post, 7/2; Dorning/Wayne, Bloomberg, 7/2; Hancock/Appleby, Kaiser Health News, 7/2; Reichard/Attias, CQ Roll Call, 7/2; Galewitz, Kaiser Health News, 7/2; Millman, Politico, 7/2; Sink, "Healthwatch," The Hill, 7/2; Rubin, "Right Turn," Washington Post, 7/2).

Want to know more about the ACA's coverage expansion?

In 2014, the ACA's Medicaid expansion and health insurance exchanges will go live, expanding insurance to millions of Americans.  

The insurance exchanges: Register for our July webconferences to learn everything you need to know about the insurance marketplaces before they begin enrolling patients on Oct. 1. For an immediate look, check out our new white paper.

The Medicaid expansion: Listen to this on-demand webconference to learn how to manage your hospital's new Medicaid population. For a quick glance, check out the Daily Briefing's primer.

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