President Barack Obama’s decision to delay implementation of part of his health care law will cost $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.
The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost of the administration’s unexpected one-year delay, announced July 2, of the employer mandate — a requirement for larger businesses to provide health insurance for their workers or pay a penalty.
The analysts said the delay will add to the cost of “Obamacare’s” insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.
“Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014),” the CBO said in a July 30 letter to Rep. Paul Ryan, R-Wis., chairman of the House Budget Committee.
Under the health law, the requirement that employers with 50 or more full-time workers provide health coverage or incur penalties was supposed to begin Jan. 1. The requirement will now take effect in 2015.
The delay intensified doubts about the administration’s ability to implement Obama’s signature domestic policy and stirred Republican calls for a similar delay in the law’s mandate that most individuals obtain health insurance, also set to begin next year.
The Republican-controlled House followed up the administration’s decision by approving its its own measures July 14 to delay both the employer and individual mandates. Neither piece of legislation is expected to receive approval — or even a vote — in the Democratic-controlled Senate.
State and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up starting beginning Oct. 1 for federally subsidized coverage. Those whose incomes are low enough to qualify will be able to sign up for Medicaid coverage in 23 states that have opted under the law to expand the program.
Most large employers already offer health insurance and the CBO said few are expected to drop coverage because of the delay. But the change will still result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, it said.
The change also means another $3 billion in added costs for exchange subsidies. That is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid, the CBO said.
Other changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will generate about $1 billion in offsetting revenues.
CBO now puts the net cost of the law’s insurance coverage provisions at around $1.38 trillion over the next 10 years, vs. its May baseline projection of $1.36 trillion.
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