White House Delays Key Piece Of Affordable Care Act

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The Obama administration set off some pre-4th of July fireworks last night. They announced a one-year delay in implementing a key piece of the Affordable Care Act. Employers with 50 or more workers will now have until 2015 to meet new health insurance requirements for their workforce.

NPR's Julie Rovner has more.

JULIE ROVNER, BYLINE: It seems fair to say that even those who wanted this delay didn't see it coming. Neil Trautwein is a vice president for the National Retail Federation.

NEIL TRAUTWEIN: If you remember the earthquake last year, I think the ground just shook again.

ROVNER: Trautwein says the problem has been kind of a pedestrian one. Making the law work involves a lot of sharing of information between employers, insurers, governments and the new marketplaces called exchanges. And until recently, employers haven't been sure what kind of information they're supposed to give to whom, and exactly how it's supposed to get there.

TRAUTWEIN: Getting the systems to talk to talk together from employer to exchange to IRS, that complexity - essentially, the software and wiring make all that communicate well - that is where the snafu was.

ROVNER: It's important to remember that the law doesn't technically require that employers of 50 or more workers provide health insurance. But it does impose penalties if employers don't provide insurance and their workers end up getting government-subsidized coverage in the health insurance exchanges.

So when the administration recognized it needed to delay the reporting requirement for a year - because it had fallen too far behind in setting up the rules for how employers needed to report all that information - it also recognized it had to delay the penalties.

Trautwein spoke for many business groups in praising the administration for its decision.

TRAUTWEIN: I salute the administration for taking such a pragmatic view. It's not going to be a universally popular view, but it makes sense under the circumstances.

ROVNER: Trautwein is correct in that the decision was not universally popular. Opponents of the law were quick to jump on it for being politically opportunistic. That's because by delaying the penalties, it takes away employers' incentives to cut back workers hours, at least during the 2014 election year. The law's penalties only apply to full-time workers, not part-timers.

House Speaker John Boehner called the move, quote, "a clear acknowledgement that the law is unworkable," while Senate Minority Leader Mitch McConnell again called for the law's full repeal.

But despite the surprise nature of the announcement, it seemed clear that the impact was likely to be far more political than substantive. Jim Klein of the American Benefits Council pointed out that the vast majority of employers affected by the change currently provide health insurance, so an additional year isn't going to deprive a lot of people of coverage.

JIM KLEIN: Large employers are already doing the right thing. They're providing excellent coverage, and yet they were facing the prospect of not knowing what information to report to their workers, or possibly incurring penalties because of some remaining uncertainty.

ROVNER: What last night's announcement was clearly intended to do is make employers a little less stressed about the ongoing implementation of the law. The action does not, by the way, delay the requirement that most individuals have coverage starting next January 1st.

And last night's action will certainly give more ammunition to those already doubting whether everything will really be up and running and ready to go when the exchanges are set to open for business on October 1st.

Julie Rovner, NPR News, Washington. Transcript provided by NPR, Copyright NPR.