The Obama administration will delay a crucial
provision of its signature health-care law, giving businesses an extra year to
comply with a requirement that they provide their workers with insurance.

The government will postpone
enforcement of the so-called employer mandate until 2015, after the
congressional elections, the administration said. Under the
provision, companies with 50 or more workers face a fine of as much as $3,000
per employee if they do not offer affordable insurance.

It is the latest setback for a
health-care law that has met resistance from Republicans. Republican-controlled
legislatures and governors in several states have refused funding to expand
Medicaid coverage and declined to set up exchanges where
individuals can buy insurance, opting to go with the federal government’s plan rather than creating their own.

The delay in the employer
mandate addresses complaints from business groups about the burden of the law’s reporting requirements.

“The administration has finally
recognized the obvious—employers need more time and clarification of the rules
of the road before implementing the employer mandate,” Randy Johnson, a senior
Vice President at the U.S. Chamber of Commerce, the nation’s largest business
lobby, said in an email.

Valerie Jarrett, a senior Obama
adviser, said in a blog post announcing the move that the administration
decided on the delay so officials could simplify reporting requirements and
give employers a chance to adjust their health-care coverage.

Congressional Elections

The 2010 Patient
Protection and Affordable Care Act allows the Obama administration to set the starting date for the information-reporting requirement that is key to
enforcing the mandate that companies cover their workers. While the White House
had not yet announced a date, enforcement of the mandate had been widely
expected to begin in 2014, an official said.

Congressional elections will
take place in November of next year, and the delay potentially shields
Democratic candidates from a backlash generated by the additional regulations
on employers.

The White House had been in
discussions with business groups over complaints about the reporting
requirements and believes it can simplify the process, two officials said.

“As we implement this law, we
have and will continue to make changes as needed,” Jarrett said in her blog
post. “In our ongoing discussions with businesses we have heard that you need
the time to get this right.”

Reporting Burden

The employer mandate imposes extensive reporting
requirements on businesses, including the
months during which each employee and any of the employee’s dependents was
covered by health insurance, the official said. The Business Roundtable said in
a June 11, 2012 comment letter that reporting requirements would demand
“substantial changes in administrative procedures and reprogramming of
recordkeeping systems.”

According to a White House fact
sheet, more than 96% of companies with at least 50 employees already offer
health insurance to their employees.

The officials said the decision
stemmed from a commitment in the administration to reduce regulatory red tape and
drew parallels to a move earlier this year to cut the length of application
forms for insurance provided through government-sponsored exchanges from 21 pages to 3.

Wise Decision

Neil Trautwein, Vice President and Employee
Benefits Counsel for the National Retail Federation, called the move “an
unexpected but extraordinarily wise decision.”

It could lead companies to
delay their own decisions on whether to offer coverage to all their workers,
Trautwein said.

“The administration is
certainly encouraging employers to continue and expand offerings,” he said.

Tim Taft, President and Chief
Executive Officer of Fiesta Restaurant Group Inc. (FRGI), reacted to news of
the delay in a phone interview: “Hooray,” he said. “That’s so huge.”

“The delay affords us what is
really needed, which is time to get our heads and minds around how this is
going to work,” Taft said.

200,000 Employers

Former White
House health policy adviser Ezekiel Emanuel, now Vice Provost at the University
of Pennsylvania, said on MSNBC’s Morning Joe that the delay of implementation
of the employer mandate will impact a limited number of companies.

The provision only applies to
employers who have 50 or more employees, Emanuel said. He estimated that there
are 200,000 total employers in the U.S. impacted and that “94% already offer
health insurance” to employees.

“We need to look for 2020
rather than moment to moment for changes in the system,” Emanuel said.

The law has had opposition
from Republicans all along and only passed Congress with Democratic votes and was later challenged before the U.S. Supreme Court.

So far only 16 states have agreed to
set up the new exchanges, or marketplaces to sell insurance to people who do
not get it at work. Twenty-four states have refused to expand Medicaid, as
called for under the law, according to Kathleen Sebelius, Obama’s Secretary of
Health and Human Services.

Congressional Republicans, who
have vowed to try to repeal the law, have refused funding requests for about $1
billion more to help enact the statute and ensure it runs smoothly. Instead,
they have started multiple investigations into the implementation.

This is not the first time the law has been scaled back. In March, it was decided that small businesses would not be able to give their workers a choice of health plans in exchanges set up just for
them. In January, a plan to create new nonprofit insurers in states was
curtailed after Congress capped funding for the companies. This law’s path has been complicated and more changes are sure to be on the horizon.