It’s not just the employer mandate: Three Obamacare delays you haven’t heard about

July 8, 2013

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For many Americans, July 5 was a great day to relax, sleep off a hangover and take in a long weekend.

For the Obama administration, it was the perfect moment to release a 606-page final regulation on some of the health-care law's most key provisions. Mostly, the rule spelled out in no short detail how the Medicaid expansion and health insurance marketplaces will work. It also included a number of delays that, up until Friday, had not been made public. The word "delay" turns up 45 times in the document.

So, what's on hold? Here's a quick summary of what the Obama administration is holding off on.

1. State-run marketplaces will not have to verify consumers' claims that they do not receive health insurance from their employer. As Sandhya Somashekhar and I reported Friday, the health law relies partially on the federal government knowing who receives employer-sponsored insurance and who does not. Anyone who receives an affordable offer of health insurance from their employer (less than 9.5 percent of their income) does not qualify for a federal tax credit.

Initially, the federal government had told the 17 state-based marketplaces that it could handle the heavy lifting of monitoring claims by applicants that they did not receive employer-sponsored insurance. But after encountering "legislative and operational barriers," the federal government has decided it does not have the manpower. Moreover, it will not require the states running their own marketplaces to do this check until 2015.

The upshot of this delay is that you could see some people who shouldn't qualify for tax subsidies, because of their employer-sponsored insurance, getting them anyway. This wouldn't be unprecedented: During the initial roll out of Medicare Part D, some seniors who should not have received low-income subsidies got them anyway.

2. The federal government will scale back oversight of what applicants say they earn. Knowing an applicant's salary is crucial for the Affordable Care Act: Their income determines what kind of tax subsidy they receive, if they get any assistance at all.

In preliminary rules, the Center for Medicare and Medicaid Services had proposed a system where they would request more income verification data anyone who reported an income that was 10 percent lower than what federal data said they earned in the previous year. It might turn out, the discrepancy was warranted, if the applicant lost their job, for example. Or, it could also be an attempt to game the system, using a lower income to qualify for higher tax credits.

The federal government has since decided to scale back these requirements, and, in 2014, only double-check a statistically significant number of these people with large income discrepancies, rather than the entire group. Unlike the delay on employer insurance verification, this provision effects all 50 states.

This delay has lead to some speculation that consumers, in states that don't expand Medicaid, could overreport their income in order to qualify for federal tax subsidies. This is an area I don't yet feel versed enough to comment on (but plan to get there soon), so would suggest reading these blog posts from Avik Roy and Harold Pollack. One factor to keep in mind: The federal government does have the power to recoup tax subsidies that are too big for an individual's given income.

3. Electronic notices for Medicaid will not be required until 2015. "We recognize that states are at different places in the development of their eligibility and enrollment systems," CMS stated in the Friday regulation. "Technology needs to be in place to offer beneficiaries and applicants the option to receive notices electronically." Out of concern that the technology won't be in place, the federal government will give state Medicaid programs until 2015 to roll out electronic notices. These would include notices of what tax subsidy, for example, an individual applicant is eligible to receive.

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Zachary A. Goldfarb | July 8, 2013