Everything You Want to Know About the Obamacare Delay but Were Afraid to Ask
Obamacare was designed to take effect in little pieces — people under 26 could stay on their parents' insurance immediately, for example, but the expansion of Medicaid takes effect next year. One of those pieces was delayed on Tuesday — the employer mandate, which is different from the individual mandate that brought about a Supreme Court case last year. The Treasury Department delayed the mandate that all employers with more than 50 employees give those workers health insurance or pay a fine. They have till 2015, instead of 2014. Republicans say the delay only shows the law is doomed to failure. House Speaker John Boehner said, "This is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms." House Oversight Committee chair Darrell Issa said the delay "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." The rule was bad, in other words, but President Obama is breaking the law to delay the bad law from taking effect.
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Here's what you need to know about the delay, from unemployment concerns and chain restaurants to the mandate's "weird" construction and what this means to you between now and 2015, especially if you live in California:
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What happened?
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The Obama administration delayed requiring all employers of 50 or more full-time workers give them insurance until 2015 or pay a fine of up to $4,000.
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Why?
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Treasury said it needed more time to write streamlined paperwork requirements that wouldn't be too burdensome for businesses.
But what's the real reason?
It's possible what the Obama administration was really worried about was jobs, Business Insider's Josh Barro writes. As the Center on Budget and Policy Priorities explains, the employer mandate that the rule would discourage businesses from hiring to stay under the 50 full-timers limit, and encourage them to lessen the hours employees work so they don't count as full-time. (The law defines a full-time worker as someone who works 30 hours a week.)
Who complained?
"The loudest objections to the mandate have come from the restaurant industry, and for good reason," Barro writes. "Restaurants employ lots of low-skill workers, and either adding health insurance or paying a $2,000 penalty would result in a large percentage increase in the cost of employment." Chain restaurants would be hit the hardest, because they'd have to compete with small restaurants who could stay under the 50-employee limit.
Why did everyone else think the rule was dumb?
Mostly because most analysts agree the American system of getting health care through employers is dumb, from Forbes' Avik Roy to The Washington Post's Ezra Klein. But the mandate could have been constructed better. Congress even considered a better version before Obamacare passed, Klein reports. The Center for American Progress's Topher Spiro explained: "The employer mandate in the House bill was much better constructed from a policy point of view... It was based on the percentage of payroll you spent on health care rather than on how many workers you had, so there’s not this weird disincentive related to part-time workers. But it didn’t have the political support to pass."
What will the delay do?
The individual mandate is not delayed — meaning even if your employer has extra time to get you insurance, you don't. At Forbes, Roy notes that the percentage of Americans who get their health insurance through their employer has been declining for more than a decade. Delaying the employer mandate a year could mean more people get insurance through Obamacare's exchanges. Because people earning up to 400 percent of the federal poverty level qualify for subsidies to buy insurance on the exchanges, this could make Obamacare more expensive. "Obama needed the mandate to get Obamacare passed because it would reduce participation in the exchanges and therefore the law's overall costs," Barro says. Now that Obamacare is the law of the land, the administration can tinker with it to "raise Obamacare's cost to taxpayers but improve its effects on the economy."
What won't the delay do?
It won't postpone the date Obamacare's exchanges go online. "We are full steam ahead for the Marketplaces opening on October 1," White House adviser Valerie Jarrett said. Small businesses will still be able to use them to shop for insurance plans for their employees.
What's up with the exchanges?
Everyone's watching California, because it's a big state and a fifth of non-elderly residents were uninsured. California has released the prices of individual plans to be sold on its exchanges — and people were pleasantly surprised, because they were cheaper than expected. For example, a "silver" plan — offering a medium level of coverage — was projected to cost $450 a month, but will cost $300 a month instead.
But other news is less good. The biggest health insurer in America, UnitedHealth Group, says it will stop offering individual plans in California, the Los Angeles Times reports. United Health Care had only about 8,000 customers for its individual plans. But last month, Aetna made a similar move — and its individual plans covered 50,000 Californians. Obamacare was supposed to increase competition, but in this case, it's shrinking it.
