“The point is, is that the mandate was not delayed. Certain reporting by businesses that could be perceived as onerous, that reporting requirement was delayed, and partially to review how it would work and how it could be better. It was not a delay of the mandate for the businesses, and there shouldn’t be a delay of the mandate for individuals.”
— House Democratic Leader Nancy Pelosi (Calif.), news conference, July 11, 2013
After all of the headlines in the past week, we were surprised to see Pelosi’s assertion that the “mandate was not delayed.” Indeed, just minutes before Pelosi made these comments, House Speaker John A. Boehner (R-Ohio), held his own news conference to complain that other elements of the law have not also been delayed.
“The president has delayed Obamacare’s employer mandate, but hasn’t delayed the mandate on individuals or families,” Boehner said. “I think it's unfair and indefensible. If you’re a software company making billions of dollars in profits, you’re exempt from Obamacare next year. But if you’re a 28-year-old struggling to pay off your student loans, you’re not.”
That’s such a dramatically different take that one can see why most Americans hate politics. So what’s going on here?
The Obama administration announced the change last week in an unusual way — with a blog post on the Treasury Department Web site with a title designed to not give away the news: “Continuing to Implement the ACA in a Careful, Thoughtful Manner.”
The blog post, under the name of Assistant Secretary Mark J. Mazur, announced that the administration, for one year, was delaying employer reporting requirements in order to simplify them and to give employers time to upgrade their systems. So that’s what Pelosi is referring to. But near the end of the post, Mazur adds this:
We recognize that this transition relief will make it impractical to determine which employers owe shared responsibility payments (under section 4980H) for 2014. Accordingly, we are extending this transition relief to the employer shared responsibility payments. These payments will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.
What are “employer shared responsibility payments”? Under the law, employers with 50 or more employees are required (“mandated”) to provide health insurance to all employees who work 30 or more hours per week starting in 2014. If the company fails to do so, it will be subject to a $2,000 per employee “failure to offer” penalty, not counting the first 30 full-time employees. There is also a separate $3,000-per-employee targeted penalty if the employer coverage is inadequate or unaffordable, though it can’t exceed the first penalty.
Those payments are a key part of the mandate to provide insurance. And it certainly looks like those fines were delayed a year.
Pelosi spokesman Drew Hammill said she was “diminishing the impact of the decision,” which he said would result in “no fundamental change to the law.” He noted that the Treasury announcement still encouraged employers to maintain or expand coverage during the 2014 transition period, and that employees could still qualify for premium tax credits and participate in health care exchanges. Moreover, he noted that the vast majority of firms with more than 50 employees — about 96 percent — already offer health-care coverage.
So what’s Boehner talking about when he says a software company making “billions of dollars” is exempt from Obamacare? Don’t firms as big as that already offer health care to employees?
The reality is a bit more complex. They may offer health care but not to all employees. By one estimate, derived from Employee Benefits Research Institute research by an Obamacare critic, 46 percent of the nation’s uninsured workers are employed by large firms. Another survey shows that only 76 percent of employees in firms with 200 or more workers are eligible for health-care benefits.
While Boehner offered a hypothetical, it is quite possible that a large employer that suddenly had faced a requirement to provide insurance to all employees will now have an extra year to meet that mandate. Still, the actual number of people who would be affected is subject to dispute, as PolitiFact showed in a survey of the research.
Ironically, left-leaning groups disliked the employer mandate when it was first proposed on the grounds that might be too complicated and costly for companies to administer and because it might encourage employers to hire fewer low-income workers.
The Pinocchio Test
Encouraging employers to provide health insurance is not the same thing as mandating it. We understand Pelosi’s desire to minimize the impact of the decision — and supporters of the law may have a strong case that the employer mandate is not as central to the law as the individual mandate to buy insurance — but that’s not an excuse to deny reality.
Yes, reporting requirements were delayed. But, as a consequence of that action, there also was a one-year delay of the actual employer mandate. It’s right there in the announcement.
Update: Some readers have asked why this claim did not result in Four Pinocchios. We initially were tempted to award that rating, but decided that Pelosi did describe correctly what Treasury did, which is delay reporting requirements. But she then acted as if there was no consequence, which is incorrect. The difference between a Three and a Four is sometimes narrow, and we ultimately concluded she just missed earning a Four. But it was certainly a close call.
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