What will the Obama Administration’s decision to suspend enforcement of penalties against employer who don’t insure their workers mean for the implementation of the Affordable Care Act?
That’s hard to say, but it will likely complicate it further, despite the administration’s assertion that they are delaying the requirements on employers because businesses said they were too complex to deal with.
The original law, passed in 2010, required nearly every individual to have insurance by Jan. 1 2014, either from an employer, on their own or from the government. Employers of 50 or more were required to offer coverage or else pay a penalty of $2,000 per worker for every employee more than 30. Those employees who were not offered affordable coverage at work but made too much money to qualify for government programs — Medi-Cal in California — were to be given access to subsidized coverage through new, online health insurance markets.
Two of those three legs of the system are still on track in California. The state plans to expand Medi-Cal, using mostly federal money, to more than 1 million additional low-income people on Jan. 1. And on Oct. 1, individuals are supposed to gain access to the new insurance market, called Covered California, where they will shop for coverage made more affordable by federal tax credits. But Obama’s Treasury Department now says employers won’t be required to report who they are covering, or pay penalties, until Jan. 1 2015.
And here’s the wrinkle caused by Wednesday’s announcement: Only those people not offered affordable coverage at work will qualify for subsidies through the health exchange, but since employers won’t be required to offer it, or report who they are covering, it is unclear how Covered California — or the IRS — will know who qualifies.
On a more practical level, it is also unclear how the lifting of the rules on employers will affect the number of people who gain coverage at work. If fewer employers offer coverage, and more workers get their policies through Covered California in the first year, that might prompt employers to stay on the sidelines altogether. If they see their workers getting coverage, and the employees are more or less happy with it, more businesses might simply decide to pay the penalty in 2015 rather than the substantially higher cost of covering their workers.
That wouldn’t necessarily be a bad thing. Our employer-based system has a lot of problems, and causes a lot of problems. But it would be disruptive, and, at least in the short term, it might lead to some political blowback on the Democrats who crafted the ACA.