The Obama administration announced on July 2 that the January 1, 2014 deadline for many employers to provide health insurance for their employees or pay a penalty was being pushed back by one year. The announcement was confirmation of several things, none of them benefiting workers, employers or the nation in the long run.
The masters of spin and obfuscation in the Obama administration will couch this decision in terms that describe it as a “minor adjustment” to the pending disaster that is Obamacare. It is not. It is two things: a political retreat before the midterm elections of 2014 that vulnerable Democrats are demanding cover from, and buying time from the comprehensive launch of a poorly designed and likely unmanageable system.
First the politics. Obamacare has never been popular with a majority of voters. In spite of frontloading the benefits of the program and backloading the poison, Obama’s “legacy” issue has been anything but popular. Vulnerable Senate Democrats—many who cast the deciding vote for the program–will be up for re-election next year. To say they are anxious about Obamacare being used against them by their Republican opponents is an understatement. Data already is showing that the cost of premiums in the individual marketplace will significantly increase–if not skyrocket–once the individual mandate hits next January 1. Costs for health insurance are definitely going up prior to the elections next year. The question is, will lower wages and job losses accompany them?
The Obama administration’s announcement of the delay, regardless of what policy justification it tries to attach to it, is an admission of confusion, incompetence, faulty policy and unintended consequences. This is the major policy initiative of President Obama’s first term, voted for by every Senate Democrat and almost every House Democrat. The law was passed well over three years ago but still is in turmoil because the bureaucrats in charge of implementing it still can’t launch a workable version.
One factor that led to the moratorium on the employer mandate is the impact the law is having on the labor market. Two main factors are at play here. Employers with 50 or more low-wage, low-skill workers are already cutting hours for employees to get them below the 30-hour threshold for qualifying for healthcare benefits under the law. These workers are seeing their hours, and their incomes, reduced due to their employers’ response to the law. Other employers are simply opting to get out of providing expensive health insurance entirely and paying a penalty that is less expensive than providing coverage. That will force employees to get health insurance from the state exchanges in the individual marketplace where premiums are likely to skyrocket.
Why? Because younger and healthier participants in the workforce are going to be forced to pay much higher premiums to offset the costs of older workers or those who either themselves or members of their families have pre-existing medical conditions. The candy ballyhooed by Team Obama at the passage of Obamacare is now turning to castor oil and they don’t want the full impact to hit until after many of the folks who cast the deciding votes for this huge, expensive distortion of the healthcare system move past their next encounter with the voters. They created this monster. They punted to the inept bureaucracy to put the finishing touches on the beast. Now they want to put some distance between themselves and one of the law’s unpopular features until after the 2014 election. The law’s creators may be horrible policy architects but their cynicism is sterling.