Late Tuesday, the Treasury Department announced it was delaying until 2015 a key component of ObamaCare. Employers with more than 50 employees were originally required to provide insurance or pay a penalty, beginning in 2014. That mandate has been pushed back to 2015, conveniently after next year’s midterm elections.
This is actually the second delay of a major ObamaCare provision. Last year, the Administration announced it was delaying until 2015 a program that would help employees of small business shop and compare health plans. These delays are an admission that the law is very complicated and will have major consequences on the overall economy.
While businesses will get an extra year to come into compliance with the law, individuals will still be required to have health insurance by 2014. Those workers who otherwise might have been covered by their employer under the law, will now have to purchase their own coverage in the health care exchanges. This wrinkle will no doubt increase confusion surrounding the law.
In three months, health insurance exchanges, where individuals can buy coverage, are set to open in all 50 states. Most of these will be run by the federal government, as only a handful of states have opted to build their own exchange. The Administration will then have three months to convince millions of Americans without health insurance to buy coverage. For many, it will be a tough sell.
ObamaCare relies on getting millions of young, healthy people to buy coverage, so their premiums can be used to offset the expanded coverage mandates for others. Without payments from people who don’t use health care services, premiums for others in the system would skyrocket.
Nearly half of Americans without insurance, however, are not even aware of the requirement that they purchase coverage, according to a recent Gallup poll. The Administration has a very small window to both educate them about the law AND convince them to purchase coverage. Even with federal subsidies, coverage may still be too expensive for many given the economic climate.
If, towards the end of year, it becomes clear that a significant number of the uninsured aren’t purchasing coverage, then insurance companies will panic. They will be obligated to meet increased benefits, but without the premiums from people who don’t use the health care system to support these benefits.
There is a very good chance the individual mandate will get put off for a year as well.