The Obama administration announced Tuesday that it would delay the implementation of a key portion of the 2010 health care law that requires businesses to provide health insurance for their employees. The move was made in response to growing concern that compliance with the Affordable Care Act was confusing and costly.
Businesses with more than 50 employees will now have until 2015 to provide health insurance coverage, a year later than the provision was set to take effect. Those that elect not to provide the benefit will be fined $2,000 per employee. Businesses were concerned that the reporting requirements to demonstrate compliance with the law were not clear enough.
Mark Mazur, Assistant Secretary for Tax Policy at the Treasury Department, said in a statement that the administration wanted time to simplify the reporting requirements:
Over the past several months, the Administration has been engaging in a dialogue with businesses - many of which already provide health coverage for their workers - about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. 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.
The health care exchanges created by the law are still set to take effect October 1, and the administration is planning a public education campaign to ensure Americans understand their options. The delay in the employer mandate won't affect the launch of the exchanges and will not prevent those seeking coverage outside of the workplace from receiving it.
Many big businesses already provide coverage to their employees, which diminishes the amount of people affected by the delay. This could, however, raise the cost of the law, because it will increase the amount of people enrolling in the exchanges rather than being covered by their employer.
House Speaker John Boehner, R-Ohio, who has vehemently opposed the law, said it is already hurting the American economy. The House has voted 37 times to repeal the Affordable Care Act, though a repeal likely never pass in the Democratically-controlled Senate.
"This announcement means even the Obama administration knows the 'train wreck' will only get worse," Boehner said in a statement. "I hope the administration recognizes the need to release American families from the mandates of this law as well. 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."
Republicans see the decision as politically motivated, because the delay will postpone implementation of the mandate until after the 2014 elections. Yet that could allow them to use the delay as further proof the Affordable Care Act is misguided and full of regulatory burdens, which could work to their advantage in midterm races.
The business community applauded the delay, with Chamber of Commerce President and CEO Thomas J. Donahue saying it "will help avoid some serious near-term economic consequences of this law."
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