Get Ready. Get Set. STOP!

Friday, July 5, 2013

T.S. Eliot famously wrote that the world would end “not with a bang but a whimper”. The Obama administration must be Mr. Eliot’s biggest fans.

The Patient Protection and Affordable Care Act (PPACA) was signed into law, amid great fanfare, on March 23, 2010. Major rules and edicts are released by Kathleen Sebelius, Secretary of Health and Human Services, almost every Friday. The entire process, if neither practical nor well thought out, has at least been well choreographed. So imagine the universal surprise everyone experienced with last Tuesday’s whispered announcement.

Mark Mazur, Assistant Secretary for Tax Policy at the Treasury Department, posted in an official blog that the enforcement of the employer mandate would be postponed for one year. The provision that medium and large employers (50+ employees) would be required to provide adequate and affordable health insurance to their workers has been put on hold.

In a blog!

Rules and regulations will be released next week. One of the most complicated portions of the PPACA, a series of requirements that have caused businesses and insurers uncounted headaches since the day the law was passed, is kicked back a year and the information is released through a blog, during a holiday week, while the President is on a plane thousands of miles from the U.S.

Now don’t get me wrong, this blog has asserted as recently as last week that the PPACA needed significant revisions and that it was a shame that the Democrats in Congress seemed incapable of fixing even the largest of problems. They still aren’t. The Administration should be commended for doing something, anything, to avert what has been called a “train wreck”.

Style Points – 0

We are waiting for the details to award points on substance.

Before we get to what this means, let’s first hear from the usual suspects. Fans of the PPACA were swift to point out that they never really liked the employer mandate.

Ezra Klein noted in Wonkblog, his excellent online work for the Washington Post, that the employer mandate is a “bad bit of policy” and that it was initially pushed by business groups.

Steve Benen wrote in MaddowBlog, the official blog of MSNBC’s Rachel Maddow, that this wasn’t really that big a deal since “the delay won’t affect the creation of the exchanges, which should help bridge the gap—folks working for businesses that don’t offer coverage will still be eligible for subsidies they can use to buy insurance in their state marketplace.” (Different site, same picture)Striking a conciliatory tone, E. Neil Trautwein, a vice-president of the National Retail Federation, said that is was a ‘wise move” and that it “will provide employers and businesses more time to update their health care coverage without the threat of arbitrary punishment.”

The Republican Leader of the Senate, Mitch McConnell (R-Ky) released a statement that “the fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans.” Translation – I got nothin’

What does it mean?

According to our friends at Anthem Blue Cross, the immediate results of this decision by the Obama Administration are that certain parts of the PPACA will go into effect on 2015 instead of 2014:
  • Employers will not have to report certain information to the IRS. This has been referred to as “employer reporting requirements”.

  • The rule that says large employers have to offer coverage to full-time workers or pay a penalty. “Large employer” in this case is a business that has 50 or more full-time or full-time equivalent employees (that work an average of 30 hours a week).

  • The rule that says coverage offered by large employers cannot be more than 9.5% of a worker’s pay for self-only coverage.

  • I would add a fourth. If employers aren’t required to offer coverage, then group health policies (employer sponsored) are not required to comply with the PPACA’s laundry list of Essential Health Benefits. Large employers will still be able to determine whether they choose to offer Birth Control, IUD’s, and the Morning After Pill as well as other controversial elements of the President’s plan.

    This last issue has been a huge point of contention. The federal government now has an additional twelve months to resolve these issues. Unfortunately, only Congress can repair the major flaws of the PPACA, and that is unlikely to happen. Even if the Democrats were capable of drafting the legislation necessary to make the PPACA effective, the Republicans are too dug in, too invested in the law’s failure at any cost, to throw it a lifesaver.

    So we have been set adrift. Our only hope will be more regulatory fixes, engineered by the Administration, released by underlings in blogs or buried deep within reports. All the while employers work and rework their business plans to comply with rules that may change at any time.   Dave