Yesterday’s decision by the Obama administration to defer the mandate for small employers to comply with the Affordable Care Act is a doubled-edged sword. While employers have been given a reprieve complying with the new law there is a deeper message in the implications of this delay that can have far-reaching impact for many stakeholders. A key underlying component of Obama Care was to ensure that insurance was made more accessible for individuals to manage their health. Small employers represent a significant component of the U.S. economy, and hence the uproar by business owners that ultimately led to yesterday’s decision.
In response to the current dynamics of the ACA, employers reacted in a predictable manner in gaming the system as to how employees would be labeled part-time versus full-time in order to avoid the penalty. At the end of the day what remains unclear is whether employees of these small businesses will actually have access to affordable health insurance. The nuances of how the law was written could enable an employer to provide bare-minimum coverage that may not necessarily be satisfactory for some individuals. These same people would then turn to the health-insurance exchanges to find coverage, but could find themselves in a circumstance where they would pay more because their employer is, in fact, providing coverage they have opted out of.
While it may seem that simply deferring the inevitable until 2015 will somehow miraculously avert the impending doom seems curious. Many employers will still need to make a decision about whether they provide any kind of coverage or simply defer to the health-insurance exchanges. The market places, or exchanges, are in equally deep trouble as they are unfunded and far from being ready for going live in October. The complexities of what it would take to, in fact, get so many uninsured adequate coverage was under-estimated. The promise of creating a plan that would produce significant savings in terms of costs and efficiency was futuristic and overtly aggressive. The requirements for what employers, insurance companies, doctors and consumers need to comply with is complex and the government has clearly understood that they are grossly unprepared in their ability to collect necessary information in order to impose penalties.
While the employer mandate has been waived, this will also create a significant challenge for insurance companies who are counting on individuals through these businesses to make up for the costs incurred for insuring those without it.
The delay in the employer mandate is the heralding sign of more serious problems to ensue over the next few months. Millions of consumers will still be forced to purchase insurance in the exchanges that will be unable to support the volume and queries that these consumers require. The even more unfortunate circumstance is that consumers will be required to purchase a product in the exchanges or pay the penalty. Hundreds of millions of dollar have been spent on trying to re-architect the United States health care system, but it is ever more obvious that the government has taken a bite far more than it is capable of chewing, and we are now starting to witness the incremental dismantling. It is prudent for Congress to put the brakes on any further funding of the implementation of the Affordable Care Act until there is a reassessment of how all of these delays or changes ultimately impact the promise that was sold to the American people that has now fallen short.
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