Obamacare delay is a very big deal

It has become customary over the years for White House officials to time the dump of “bad news” on the front end of a major holiday weekend. And that’s what happened on July 3 when the Obama Administration announced a one-year delay in implementing the “employer mandate”—a requirement of the Affordable Care Act (ACA) that employers with more than 50 employees provide health plan coverage or face significant financial penalties.

Democrats basically reacted with a “not much to see here” while Republicans gloated that the action underscores the insanity of the larger law.

But the delay is a very big deal for at least five reasons:

  • The decision energizes the law’s many opponents and reminds an already skeptical public that implementation will likely be uneven at best and a “third world experience” at worst.
  • The delay raises obvious questions about the delay of other provisions in the bill, including the individual mandate, which seems likely to be another casualty in the coming months.
  • The delay will cost the federal treasury $10 billion in fines and penalties according to Congressional Budget Office projections. Republicans in Congress will likely call upon the Administration to trim spending elsewhere to make up the lost revenue.
  • The meltdown of mandates lessens the probability that new coverage will climb to anywhere near the numbers predicted in 2009. That’s why the American Hospital Association criticized the decision last week.
  • The decision calls into question the viability of the insurance exchanges, which are foundational to ObamaCare. This may be the biggest issue long term as the exchanges are central to the way coverage is supposed to work under the ACA.

Under the law, eligibility for exchange subsidies depends on an individual’s coverage status. If employers are not required to report on their insurance offerings next year, how will the government determine eligibility? The answer to that question was answered this week by Administration officials calling for self-attestation. But ignoring proof of eligibility for generous benefits will encourage fraud, be expensive and potentially destabilize the larger insurance marketplace. It is quite the “dog’s breakfast.”

Steve Brenton is president of the Wisconsin Hospital Association.

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