WASHINGTON – The Obama administration’s surprise decision to delay penalizing large employers that fail to provide health coverage appears unlikely to unravel the president’s signature health care law, despite claims from Republicans that the law’s collapse is imminent.
But the move casts a spotlight on a central dilemma facing the administration as it moves to implement the complex law: Even supporters acknowledge that some of the Affordable Care Act’s provisions may not work as written. Yet partisan tensions in Washington have made changes all but impossible.
“There just are not a lot of Republicans who are anxious to help the administration fix the law,” said Dean Rosen, a Republican health care lobbyist and onetime aide to former Senate Majority Leader Bill Frist. “At the same time, there are not a lot of Democrats who want to engage in anything that might show that the law has flaws. It’s a very tough environment.”
John McDonough, a former Democratic Senate aide who helped draft the health law, noted that “there is scarcely a sentence of the Affordable Care Act that couldn’t be adjusted.”
“It is just a tragedy that the parties cannot get together and get about the business of doing that,” he said.
The so-called employer mandate – a complicated system of penalties designed to keep employers from dropping health coverage – is a prime example of the challenge confronting the White House.
Even some of the law’s supporters say the mandate, though necessary, is one of its more problematic provisions.
It requires a very complex set of reporting for businesses, many of which already are struggling with numerous other requirements. And the mandate itself, which exempts employers with fewer than 50 full-time employees, creates an incentive for some businesses to move employees to part-time work.
This arcane system serves a relatively limited purpose. The vast majority of employers covered by the mandate – more than 94 percent of them, according to an annual survey by the nonprofit Kaiser Family Foundation and the Health Research & Educational Trust – already provide health coverage. Most are not expected to stop because the benefit helps attract workers and provides businesses a tax benefit.
“The employer requirements could have been structured much better,” said Ken Jacobs, chairman of the University of California, Berkeley, Center for Labor Research and Education.
Yet there has been practically no serious effort in Washington to adjust the mandate since the health law was enacted in 2010.
White House senior adviser Tara McGuinness said Wednesday the administration still does not have any plans to seek adjustments.
“We think we can make the law work more easily by simplifying the reporting requirements and giving people more time to comply,” she said. “We are focused on implementing the law.”
McGuinness stressed that the delay would have no effect on Americans who will be eligible for federal help to buy insurance next year.
The law provides subsidies to low- and moderate-income Americans whose employers do not offer health coverage. This system of subsidizing health coverage is central to the new law; the employer mandate plays a supporting role.
White House officials also have not signaled any plans to delay the law’s individual mandate, which will require most Americans to have health coverage or pay a small fine, starting at $95 per adult next year.
GOP congressional leaders have been quick to reiterate their calls to repeal the law, which House Education and Workforce Committee chairman John Kline, R-Minn., said Wednesday “cannot be fixed.”
“The problem is that the law is fundamentally flawed,” he said.
For now, repeal remains just a political slogan, and administration officials and their state counterparts have been busy implementing other parts of the law.
New government-run health insurance exchanges are scheduled to open for consumers in October. Health insurers around the country already have designed and priced health plans to meet new standards that require them to cover a basic set of benefits.
States that plan to expand their Medicaid programs next year to cover low-income residents – an option provided by the health law – are moving forward.
Other provisions of the law – including a ban on lifetime limits on health coverage and a requirement that adult children up to age 26 can remain on their parents’ health plans – have been in place for years.
“The fact is that a lot of things have been implemented already,” said Paul Fronstin, senior research associate at the nonprofit Employee Benefit Research Institute.
Although not central to the law, the employer mandate was supposed to back up its expansion of coverage by discouraging employers from dropping health benefits.
If employers were to drop coverage and their employees qualified for government subsidies to buy insurance, that could dramatically increase the cost of the health law.
“We didn’t want employers free-riding off the government,” said Christopher Condeluci, an attorney who worked on the law while a staffer on the Senate Finance Committee.
Under the law, large employers that do not provide insurance would be fined $2,000 per employee beyond the first 30 employees.
Calculating the penalty requires employers to report, among other things, how much they are paying employees, how many hours employees work on average and how much employees contribute to health coverage, if employers offer it.
Even supporters of the health care law have criticized the provision that sets 30 hours a week as a threshold for counting employees. Particularly with so much of the U.S. workforce on variable schedules and juggling multiple jobs, the 30-hour rule could encourage employers to cut workers’ hours, experts warn.
House Democrats had pushed an alternative approach that would have penalized employers that did not spend at least 8 percent of their payroll on health benefits. That would have simplified the system, but it was fiercely opposed by employers because it likely would have been far more costly to them.
Others support a model that San Francisco used in its universal health care program that requires employers to pay a minimum hourly amount per worker toward medical benefits.