The costs and potential causes for tonight's Obamacare delay

Reuters

US President Barack Obama makes a statement about the Supreme Court's decision on his Administration's health care law in the East Room of the White House in Washington, June 28, 2012

Article Highlights

  • The Obama team said it was delaying the provision because reporting requirements were too burdensome

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  • The delay on the employer mandate will inevitably expose some additional consumers to the “individual mandate”

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  • Perhaps the administration was seeing the effects of the insurance requirement on new hiring

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The Obama administration’s apparent decision to delay until 2015, penalties for large employers who do not provide health-insurance coverage to workers under Obamacare, raises some immediate practical issues for consumers. It’s also cause for doubt as to the motivation that drove this measure.

The delayed provision was to take effect this fall. It requires companies with 50 or more workers to provide health benefits to full-time employees or pay fines starting at $2,000 per worker. Businesses were critical of the provision. They argued that it created a disincentive for small businesses to hire new workers, especially if they were bumping up against that 50-person threshold.

The Obama team said it was delaying the provision because reporting requirements were too burdensome. Officials said they needed more time to fix them.

Yet they didn’t delay the tax consumers face for not carrying coverage. The delay on the employer mandate will inevitably expose some additional consumers to the “individual mandate” (ruled a tax by the Supreme Court).

Now fewer businesses will feel compelled to start offering coverage next year. So their employees will face a choice: be forced to go into the Obamacare exchanges or be subject to the new tax.

It’s true that larger firms that would consider dropping coverage would have done it anyway. After all, the fines presumably return in 2015, and firms need to make longer-term decisions about how they will adapt to the new law. But at least for next year, this will expose some additional consumers to the tax.

As to the reason for the change, that’s also rife for skepticism. Especially since it may put more consumers in a financial bind.

The Obama team’s stated purpose seems superficial. It’s doubtful that reporting requirements alone drove this decision.

If it was just a problem with reporting requirements, some of those provisions could have been delayed without nixing the entire provision.

Perhaps the administration was seeing the effects of the insurance requirement on new hiring.

Perhaps they’re staring at a bad jobs report later this week.

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