Q&A on impact of health care law delay on businesses

  • Article by: JOYCE M. ROSENBERG , AP Business Writers
  • Updated: July 3, 2013 - 4:25 PM

A one-year delay in a central part of the health care overhaul is likely to have its biggest impact on small and medium-sized businesses, not the number of people who will be gain health insurance coverage.

The Obama administration said Tuesday that it would postpone until Jan. 1, 2015, the effective date of what's called the employer mandate portion of the Affordable Care Act. The law had required companies with 50 or more employees to provide affordable health coverage for their workers as of Jan. 1, 2014.

That provision affects by some estimates just 4 percent of the nation's more than 27 million companies. And many of those companies are already providing insurance to their workers.

Other provisions of the ACA, including the creation of state and federal health insurance exchanges, remain on schedule. Those exchanges are where individuals and small and medium-size businesses will be able to purchase health care policies.

Treasury Assistant Secretary Mark Mazur said in a blog post that the government was responding to complaints about the law, which has many regulations and rules for businesses to follow.

"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," Mazur said.

Some questions and answers about the impact of the delay:

Q. How does Tuesday's announcement affect the number of people who gain coverage under the law?

A. It shouldn't have a big impact. Congressional Budget Office forecasts show that most of the people who gain coverage are expected to do so either through an expansion of the state-federal Medicaid program that begins next year or by buying a policy through new health insurance exchanges slated to start operating this fall.  Starting Oct. 1, consumers will be able to access these new online marketplaces to shop for private insurance plans in their communities and use income-based subsidies to help pay the bill.

The employer mandate mainly serves as a way to dissuade large employers from dumping their workers on the exchanges, where federal money might be used to help them buy coverage, Citi analyst Gary Taylor said in a research note, adding that it has little to do with the expansion of coverage.

Plus the mandate is not removed from the law. It's just delayed a year.

Q. Does this mean that other key provisions of the law also will be delayed?

A. Some major coverage expansions are slated to start next year, and Tuesday's announcement shouldn't directly affect them. But it raises questions about whether other delays may be forthcoming.

There has been some speculation that the health insurance exchanges, in particular, could be delayed. A report released last month by the congressional Government Accountability Office said it could not determine whether the exchanges will get off to a smooth and timely start.

It noted that the government has made a lot of progress in laying out how the exchanges should function, but plenty of work remains. For instance, a computerized clearinghouse designed to deliver eligibility rulings needs more testing. But Health and Human Services Secretary Kathleen Sebelius has steadfastly maintained that they will open on schedule on Oct. 1 in all 50 states and Washington, DC.

Q. How does Tuesday's decision affect big companies or large employers?

A. Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. That's the requirement that is now delayed until 2015.

Most medium-sized and large businesses already offer health insurance. Ninety-eight percent of all companies with at least 200 workers provided health benefits to their employees last year, according to an annual survey done by the Kaiser Family Foundation and Health Research & Educational Trust. Ninety-four percent of companies with 50 to 199 employees provided health benefits.

The mandate was expected to have the biggest consequences for major chain hotels, restaurants and retail stores that employ many low-wage workers. Some had threatened to cut workers' hours, and others said they were putting off hiring, so those plans may be delayed.    

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