America's business leaders responded quickly – and gleefully – to the news that the Obama administration would delay key portions of the Affordable Care Act.
The Treasury announced in a late Tuesday blog post that the act's provision requiring employers to provide health insurance for workers or pay a penalty would be delayed a year, from the end of 2014 until the end of 2015. Mark J. Mazur, assistant secretary for tax policy at the Treasury, wrote that the extra year will allow the administration to consider how to simplify employer requirements and create more time to make sure the law could be implemented smoothly.
Shortly thereafter, the business community responded with its resounding approval.
"The administration has finally recognized the obvious – employers need more time and clarification of the rules of the road before implementing the employer mandate," said Randy Johnson, senior vice president of Labor, Immigration, and Employee Benefits at the U.S. Chamber of Commerce, in a released statement. He added that the chamber "applaud[s] the administration's step to delay this provision" and will continue to work to change what it calls "other problems" with the Affordable Care Act.
The National Retail Federation, a retail industry trade group, also weighed in, calling the delay a "wise move" and adding that the extra year "will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment." The American Benefits Council, a private employee benefits advocacy organization that counts many of America's largest corporations as members, said the delay "provides vital breathing room to implement the law in a more thoughtful and administrable way,"
The provisions in question require employers with 50 or more full-time employees – defined as workers who average at least 30 hours per week – to provide insurance to those workers or pay a penalty of $2,000 per full-time employee.
Businesses had complained that the law was too complicated and would considerably increase their administrative costs. Some economists had said the law would have hurt employment and wages, encouraging some smaller employers to keep their size under 50 employees or to cut workers' hours in order to remain below the threshold.
"I had anticipated that we'd see some impact for preparation of health care reform among small businesses," said Mark Zandi, chief economist at Moody's Analytics, in a Wednesday morning call with reporters. He has said for months that the Affordable Care Act would be a drag on hiring, though he added on Wednesday that the impacts that have been seen thus far have been lower than he had anticipated.
"My sense is health care reform is having some impact but it's very modest," he said, adding that the low impact he's seen thus far "runs counter to a lot of the anecdotal evidence" he has heard from trade associations and CEOs.
"They've long argued that this is going to have a very significant, noticeable impact on the job market, and again, it's hard to see in the data," said Zandi.
Some analysts also believe complaints that the law is too complicated are overstated.
"I feel like there's been lots of guidance to clear up any ambiguity in the original law, and I feel that many of those questions have already been answered and can be dealt with," says Elise Gould, director of health policy research at the Economic Policy Institute, a left-leaning think tank in Washington, D.C. The administration had been working to clarify some of these provisions in the run-up to 2014. The IRS, for example, released a proposed rule in January attempting to define what makes a "full-time employee."
Despite the delay in employer provisions, many other big changes remain on the horizon. Health insurance exchanges are scheduled to be open for business on October 1, and the "individual mandate," requiring most individuals to have insurance or pay a penalty, will still go into effect in 2014.