The 2010 Affordable Care Act has its supporters as well as detractors. Both groups are often passionate about their beliefs and feelings about government mandated health care. Several columns ago, I wrote a piece on the potential impact of the law on the P/C industry. With the latest administration announcement, the landscape has been afforded a new wrinkle.
Ardent supporters of the ACA were less than pleased with the decision to hold employer penalties in abeyance until 2015 (rather than start them in 2014). Their reasoning is that if such a key aspect of the law is delayed, it will be that much more difficult to enforce the most controversial portion of the legislation -- the individual mandate requiring individuals to purchase health care insurance or pay a "tax penalty." (The legislation calls it a penalty, but in a 5-4 decision, the U.S. Supreme Court interpreted it as a tax when ruling the individual mandate was constitutional.)
Those who believe the ACA to be inherently unconstitutional on its face posit that the decision to delay the employer penalty provision for not offering health care is a political ploy. They see it as a carefully choreographed announcement that was anything but coincidental (putting off the penalties until after mid-term elections occur).
The Obama administration has indicated that all other provisions of the ACA (including the controversial individual mandate) will go into effect in 2014, and maintains that the criticism is both unfounded and groundless.
The delay of employer penalties involves employers with more than 50 workers, who are required to offer health care coverage to all full-time employees (30 hours a week or more) or face a fine of $2,000 per worker annually. Employees who are not offered health care coverage through their employer can either choose to obtain it through the insurance exchanges, or face a penalty ($95 or 1 percent of income annually, whichever is higher) for not having coverage.
Many point out that "large" employers overwhelmingly already offer some type of health care coverage to employees, so the practical impact of the delay is minimal.
Supporters of the law also underscore the fact that employees who work for companies that do not offer health care coverage can still access the insurance exchanges, and therefore take advantage of the Affordable Care Act to secure coverage that heretofore would not have been available.
Detractors say that line of reasoning is defective. No one seems to know how the insurance exchanges will operate without accurate information from employers about whether coverage is being offered, and in order to have access to the exchanges, applicants are supposed to prove they were not offered employer provided health care insurance.
The immediate problem that comes to mind is reconciliation of data. What government entity is going to factually know whether employers are actually offering health care coverage? In order to avoid the individual mandate penalty, workers simply may be less than candid in telling the truth, and say their employer offers it when it is not the case. Will the government rely on the claims of workers without investigating whether the employer actually does offer health care coverage?
Reportedly, there were a plethora of employers who lobbied for the delay in employer penalties. They claimed they needed more time to review their options about offering coverage, cutting back their labor force or reducing full-time employees to part-time status (which will, of course, constitute an unwelcome drag on a notoriously shaky economic).
So what practical impact does the administration decision to delay the employer penalty provision have on the implementation of the Affordable Care Act? From my viewpoint, very little. The individual mandate is still slated to go into effect in January, along with the implementation and operation of the insurance exchanges.
Trying to divine the impact of the ACA on the property/casualty industry remains a guessing game at this stage. The myriad issues I outlined in my prior column on this subject remain extant, with the latest administration decision only adding to the consternation many are experiencing.
It will be sometime before all of the issues attending the ACA are properly delineated based on fact rather than opinion. That will come after the law is in effect, and the operational result of the entire legislation can be more dispassionately measured. Until that time, opinion and analysis will be as varied as the people expressing same.
July 23, 2013
Copyright 2013© LRP Publications