California says mandate delay won’t affect healthcare exchange

Peter Lee, executive director of California's new health insurance exchange, said a federal delay on large employer rules won't interfere with the state's marketplace for individuals.
(Rich Pedroncelli / Associated Press)

California officials predict that the one-year reprieve for large employers from the federal healthcare law’s penalties won’t affect the rollout of a new state-run insurance market next year.

The one-year delay announced late Tuesday by the U.S. Treasury Department lifts a requirement that companies with more than 50 full-time workers provide health insurance or pay a fine. Those employer penalties will now go into effect in 2015 instead of this January.

Those requirements were put into the Affordable Care Act to prevent firms from dropping employee coverage and shifting the cost onto the government.


Covered California, the state’s new health insurance exchange, said it remains on track to start enrollment for consumers Oct. 1.

“This has virtually no impact on Covered California and the enrollment of millions of Californians eligible for subsidized coverage,” said Peter Lee, executive director of Covered California.

“This doesn’t change our job. The fact that individuals are eligible for a subsidy or not has nothing to do with whether an employer pays a penalty,” Lee said.

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Bryce Williams, managing director of exchange solutions at Towers Watson & Co., a benefits consultant, said this delay allows government officials to sidestep potential complaints among employers and focus instead on the implementation of exchanges for individuals — a centerpiece of the federal law.

“This is intended to decrease complexity and increase the focus on getting the core exchanges up and running,” Williams said.


But some consumer advocates warned the Obama administration not to postpone the employer rules beyond January 2015.

“While a one-year delay won’t have an impact on consumers, the employer responsibility provision is crucial in the long term,” said Anthony Wright, executive director of Health Access, a consumer advocacy group.

Wright said those employer requirements and penalties are necessary “to stabilize a decades-long erosion in on-the-job benefits, provide a level playing field for employers and prevent shifts of health costs onto taxpayer-funded programs.”

Last year, 60% of California firms offered health benefits, down from 73% three years ago, according to the California HealthCare Foundation.


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