Admitting only that it is too complex, the Obama administration has agreed to delay enforcement of the always-controversial "employer mandate" provision of the Affordable Care Act, better known as Obamacare.
A key provision of the health reform act, the employer mandate requires business with 50 or more full-time employees to offer health insurance or face annual fines of up to $3,000 per employee. First set to go into effect on January 1, 2014, enforcement of the employee mandate will be suspended for one year, until January 2015, the Treasury Department announced on July 2, 2013.
While most U.S. businesses with 50 or more employees already offer health insurance plans, those that do not, along with smaller businesses considering hiring more employees have objected loudly to the employer mandate and the difficulty of complying with it.
In a Treasury Department blog post, assistant secretary for tax policy Mark J. Mazur said the White House had "heard concerns" from business owners about the complexity of the 21-page application for health insurance businesses must complete in order to comply with the mandate.
The one-year delay would, according to Mazure, give the Treasury time to meet two goals: "First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees."
"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," Mazur wrote.
Delay Means Lost Obamacare Revenue
During Congress' debates on Obamacare, the White House stressed that once fully implemented, it would be largely self-funded by a combination of revenue from some new taxes and penalties paid by non-insured and under-insured people and businesses, along with modest cuts in Medicare spending.
However, the one-year delay in implementing the employer mandate has raised questions about Obamacare funding at a time when all other provisions of the law have either already taken effect or will take effect in 2014.
In May 2013, the nonpartisan Congressional Budget Office (CBO) projected that the employer mandate would generate at least $10 billion in revenue during fiscal year 2014, which was to have been its first year of implementation. That revenue will now be lost until at least fiscal year 2015.
Overall, the CBO has estimated that the employer mandate will raise $140 billion in revenue during its first 10 years of implementation.
Obamacare's other big mandate; the individual mandate - requiring almost all individual Americans to have health insurance or pay an annual fine - is forecast by CBO to generate an additional $45 billion.
The individual mandate remains on schedule to take effect in January 2014.
Paperwork Far From Only Problem
Aside from the increased administrative costs required to comply with the employer mandate's reporting procedures, smaller and startup businesses have objected to the costs they would face by growing to exceed the 50-employee threshold.
According to the National Federation of Independent Business (NFIB), a typical small business that does not offer health insurance would face a $40,000 per year penalty.
"But I don't own a business, so what's the problem?" The problem - for all Americans - is what small businesses can do to avoid the costs of the employee mandate, which is, don't grow.
As they have been doing since Obamacare became law and as they will continue to do unless Congress amends it, businesses are firing existing employees, not hiring new ones, and outsourcing jobs in order to stay under the 50-employee threshold.
This economy-chilling result is probably not what the Obama administration had in mind, but it is typical of what happens when Congress passes a mandate-filled, 2,700-page social reform law without reading it first. Or as then Speaker of the House Nancy Pelosi (D-Calif.) infamously said during the Obamacare debate, "We have to pass the bill so you can find out what is in it."
So they did, and now we are.