Obamacare 101: Why major part of health law is delayed, and who's affected

The Obama administration announced Wednesday that it is delaying a central part of the Affordable Care Act, aka Obamacare: the requirement that medium and large companies offer their employees health insurance or face fines.

The move is a big change in the implementation of a law that’s already raising lots of questions around the country. So we’ll try to explain it in simple language.

What happened, exactly?

Under the ACA, firms with at least 51 employees must offer health insurance to their full-time workers. If they don’t, and if even one of their employees turns to the new government-run health exchanges to purchase an individual policy, they get slapped with fines. These penalties would top out at about $2,000 to $3,000 per employee.

This was supposed to take effect in 2014, along with many other important parts of the sweeping legislation. But now it won’t. Assistant Treasury Secretary for Tax Policy Mark Mazur put up a blog post late on July 2 announcing that the employer mandate will be postponed until 2015.

“We have heard concerns about the complexity of the [mandate] requirements and the need for more time to implement them effectively,” Mr. Mazur wrote.

Why did this happen?

As Mazur said, the administration has “heard concerns.” This is bureaucratese for “lots of businesses, including some who support the ACA, called us up and yelled about how the regulatory details in this area came out too slow, they don’t know what to do, and maybe they’ll just stop hiring people until we get our act together.”

According to Mazur, the delay will allow the government time to simplify the stuff companies have to tell the feds about how they’re complying with the law. It will also provide time for the companies themselves to make the necessary changes to their own policies and computers so everybody is on the same page, so to speak.

What Mazur didn’t say was that the US will also now get a longer period in which to deal with several of the most difficult regulatory details here: who is a “full-time employee” for the purposes of the health law, and what constitutes a “51-employee firm” that’s subject to the fines.

If you’re an entrepreneur who owns a number of chain sandwich shops, for instance, is each shop a separate business? Or are they lumped together? The answer could make a big difference under this law.

How many people will be affected?

According to the authoritative Kaiser Health News, this delay will directly affect only a small number of Americans, in terms of restricting their access to health coverage. Upwards of 90 percent of US workers are employed by companies that already provide health-care plans. It is other big ACA provisions, notably the requirement that individuals get health coverage of some kind, and the US offer to pay for state expansions of Medicaid for the poor, that are supposed to add many more people to the ranks of the covered.

“Those measures are still in effect, although many states have opted not to expand Medicaid next year,” write Jay Hancock and Julie Appleby of Kaiser Health News.

Why is the postponement important?

This is still a big deal, even though only a small slice of the population is affected. The first reason is that the ACA is a big, complicated, interconnected piece of legislative machinery. If you fiddle with the timing of one part, others start to get out of whack. That implies more changes down the road.

Consider the individual health exchanges. You are eligible to buy coverage from them, helped by federal subsidies if you qualify, if your employer does not offer insurance. That’s still supposed to start in 2014. But are you eligible if your employer just has not yet made up its mind, and may offer policies in 2015?

Also, the move may blow a hole in the federal health budget. The US was counting on about $10 billion in employer-paid fines to help fund ACA in fiscal year 2015, according to Congressional Budget Office figures. Now it won’t get that money, but it is still planning to start federal subsidies for lower-income Americans who buy policies through the exchanges, as noted above. So money will go out here while less is coming in.

Finally, the delay adds to the perception that the Obama administration has been slow to implement the ACA and provides political opponents further reason to argue against the law.

Many Republicans now argue that if this part needs to be delayed, why not put off the whole thing? Indeed, why not just, oh, scrap it. They’ve voted to do that in the GOP-controlled House, haven’t they?

“In deciding to postpone the implementation of the employer mandate, the Obama administration has undermined its sole claim to greatness and delivered a blot to Democrats on the ballot in 2014,” writes conservative Jennifer Rubin on her Right Turn blog at the Washington Post.