JEWEL SAMAD/AFP/Getty Images
US President Barack Obama makes a statement to reporters on the Affordable Care Act at Fairmont Hotel in San Jose, California, on June 7, 2013. On Tuesday the Treasury Department released a statement that the Obama administration would delay by a year the fines employers would get for not offering coverage for their employees.
In a major concession to business groups, the Obama administration Tuesday unexpectedly announced a one-year delay — until 2015 — in a central requirement of the new health care law that medium and large companies provide coverage for their workers or face fines.
"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," Treasury Assistant Secretary Mark Mazur said in a blog post. "We have listened to your feedback, and we are taking action."
Under the Affordable Care Act, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. Business groups have complained since the law passed that the provision was too complicated.
The unexpected decision is sure to anger liberals and labor groups, but it could provide cover for Democratic candidates in next year's congressional elections.
While the White House sacrificed timely implementation of a key element of President Barack Obama's health care law, the move also undercuts Republican efforts to make the overhaul and the costs associated with new requirements a major issue in congressional races. Democrats are defending 21 Senate seats to the Republicans' 14, and the GOP had already started to excoriate Senate Democrats who had voted for the health law in 2009.
Senior White House adviser Valerie Jarret cast the decision as part of an effort to simplify data reporting requirements.
She said since enforcing the coverage mandate is dependent on businesses' reporting about their workers' access to insurance, the administration decided to postpone the reporting requirement, and with it, the mandate to provide coverage.
"We have and will continue to make changes as needed," Jarrett wrote in a White House blog post. "In our ongoing discussions with businesses we have heard that you need the time to get this right. We are listening."
Key passages from the statement by Mark J. Mazur, who is the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury:
Over the past several months, the Administration has been engaging in a dialogue with businesses — many of which already provide health coverage for their workers — about the new employer and insurer reporting requirements under the Affordable Care Act (ACA). We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively. We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so. We have listened to your feedback. And we are taking action.
The Administration is announcing that it will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin. This is designed to meet two goals. First, it will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees. Within the next week, we will publish formal guidance describing this transition.