The wrong way to fix Obamacare
The sprawling 2010 Affordable Care Act has proved so hard to implement that the Obama administration has delayed or waived multiple provisions of the law in the hope of avoiding even more breakdowns and confusion. Last week the administration put off for another year the requirement that larger employers provide coverage for some or all of their workers. It’s also reportedly considering a longer delay in implementing the law’s minimum standards for insurance policies. Although the administration may have the right motives, its aggressive use of executive power to change deadlines and weaken requirements sets an unwelcome precedent. It also risks subverting some of the goals of the law the president is trying to protect.
The 2010 law requires employers with at least 50 full-time workers to offer comprehensive health insurance to their workers starting Jan. 1, 2014. Lawmakers included that mandate mainly to deter employers from dropping coverage and dumping workers into the new, subsidized insurance exchanges. Last year, the Treasury Department unilaterally suspended the mandate until 2015, saying it was late in writing the rules for how to comply. That was a reasonable justification for the delay. Last week, however, the department said that it was suspending the mandate for yet another year for employers with 50 to 99 full-time workers, and allowing larger businesses to cover only 70% of their employees in 2015. The rationale? The administration decided it would be better to have a “gradual phase-in” than the deadline Congress ordered.
The tax code gives the administration great flexibility when implementing changes in tax law, as long as its actions are consistent with Congress’ dictates. The employer mandate isn’t really a tax policy, however; it’s part of the initiative to extend insurance coverage to more Americans. Rather than changing the mandate by fiat, President Obama should have asked Congress to fix the provision. On the other hand, the Republicans who control the House have shown no interest in improving the law; they just want to kill it. So it’s hard to fault Obama for not engaging in a fool’s errand.
Ordering employers that don’t offer coverage to insure their workers will almost certainly have unpleasant side effects, such as discouraging companies from employing more than 49 full-time workers. The phase-in could mitigate some of the unintended consequences, but it’s more likely to just delay the pain until after this year’s election.
Another deadline Obama has delayed involves the law’s minimum standards for insurance policies, which were supposed to have gone into effect by Jan. 1. The standards were designed to give consumers buying individual policies some of the advantages of large group plans, where risks and costs are broadly shared. But most existingindividual plans didn’t meet the law’s requirements for coverage or cost, prompting insurers to notify millions of consumers last fall that they could not renew their policies. Exacerbating the problem, the cancellation letters arrived while the new insurance exchanges’ websites were struggling to overcome disastrous technical problems that made it next to impossible to sign up for replacement plans.
In response, the administration declared that insurers could renew noncompliant policies in 2014 after all, if state officials agreed. That was an extreme but understandable reaction to the botched launch of the exchanges’ websites. Now, however, the administration is mulling whether to let insurers renew noncompliant policies for up to three more years. If the administration keeps pushing off compliance, it will hobble the efforts to reform the individual insurance market. That’s clearly not what Congress intended.
Again, the many complex changes set in motion by the Affordable Care Act were guaranteed to result in a rocky transition. And with congressional Republicans cheering for the law to fail rather than trying to ensure its success, the administration doesn’t have a lot of good options for solving the implementation problems it has encountered. Still, it would be easier to defend its actions had it at least made an effort to work with Congress on the necessary fixes. And if it has to resort to bending deadlines and mandates, it should do so in a way that doesn’t undermine the law’s goals.
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