Employer Mandate? Never Mind
Obama decides not to enforce the heart of his health-care law.
These columns fought the Affordable Care Act from start to passage, and we'd now like to apologize to our readers. It turns out we weren't nearly critical enough. The law's implementation is turning into a fiasco for the ages, and this week's version is the lawless White House decision to delay the law's insurance mandate for businesses, though not for individuals.
The employer mandate is central to ObamaCare's claim of providing universal coverage. Companies with 50 or more "employee equivalents" must pay a $2,000 penalty per full-time employee if they don't provide government-approved health insurance. The provision was supposed to start in January, and delaying it is like Ford saying its electric car is ready to go, except the electric battery doesn't work.
But all of a sudden on Tuesday evening Mark Mazur—you know him as the deputy assistant Treasury secretary for tax policy—published a blog post canceling the insurance reporting rules and tax enforcement until 2015 as Washington began to evacuate for the long Independence Day weekend. Enjoy the holiday, mate.
White House fixer Valerie Jarrett tried to contain the fallout with a separate blog post promising that ObamaCare is otherwise "staying the course." That's true only if she's referring to the carelessness and improvisation that have defined the law so far.
Mr. Mazur cited the "complexity of the requirements" as the reason for the delay. He isn't talking about business confusion and uncertainty, as damaging as those are. This is probably an admission that Treasury's information technology isn't ready to process and cross-check paperwork across the 5.7 million businesses in America, especially the pass-through S-corps and partnerships that file under the individual tax code.
This is more than a typical government snafu. It relates directly to the design of the law, which was thoughtlessly written and rammed through Congress with instructions for the bureaucracy to figure it all out.
And, lo, over eight interim final rules, three final rules, 20 requests for comment, 21 proposed rules, one information collection request, two amendments to the interim final rules, six requests for information and one frequently-asked-questions document, the Administration has created an employer-mandate system that, for example, requires business to track and report every full-time employee's hours of service on a monthly basis.
Meanwhile, the law stipulates that a full-time workweek for the purposes of the mandate is 30 hours, when general business practice is at least 35. The result is that businesses have been scrambling to insulate themselves from higher labor costs by hiring part-time workers, or splitting shifts, or in some industries like fast food even sharing workers. Small firms trying to expand while avoiding the 50-worker trigger have come to be known as 49ers.
The delay will help these and other employers avoid immediately higher costs, which is why the main business lobbies endorsed it. But the decision will continue to dampen overall job creation because businesses know they'll still be whacked in a year. Businesses don't hire workers with the intention of sacking them later.
The Administration's media cheerleaders are nonetheless portraying this as a stroke of political genius to push all the pain past the 2014 elections. But if that's the goal, it is too clever by half. If Republicans have any sense, they will move immediately to delay the rest of the bill for at least a year too. They should start with the individual mandate to buy insurance or pay a tax.
Individuals are only supposed to be eligible for ObamaCare's subsidies if their employer doesn't offer the right benefits. But how will the Treasury know who qualifies in 2014 if they lack the information that businesses are supposed to provide? Citizens must also pay the individual mandate-tax if they decline coverage from their employer. How will the Treasury verify these offers?
Which brings us to the dubious legality of this delay. The Affordable Care Act's Section 1513 states in black-letter law that "(d) Effective Date.—The amendments made by this section shall apply to months beginning after December 31, 2013." It does not say the Administration can impose the mandate whenever it feels it is politically convenient.
This selective enforcement of laws has become an Administration habit. From immigration (the Dream Act by fiat) to easing welfare reform's work requirements to selective waivers for No Child Left Behind, the Obama Administration routinely suspends enforcement of or unilaterally rewrites via regulation the laws it dislikes. Now it is doing it again on health care, without any consultation from, much less the approval of, Congress. President Obama probably figures business and Republicans won't object because they don't like the law anyway.
But Republicans should give Mr. Obama the legal authority to suspend the mandate—in return for other concessions. In addition to forcing votes on suspending the individual mandate-tax, this could include repealing the medical device tax and other harmful provisions. Democrats will find it hard to defend an individual mandate-tax now that businesses are spared. And a delay of one year can easily become two, then three, and then past the next Presidential election.
ObamaCare has become a rolling "train wreck," in Senator Max Baucus's memorable phrase, and it gets worse the more of it the public sees. The employer mandate is terrible policy, as the law's critics said before it passed. Now the Administration is all but admitting it can't implement it properly, and the task for opponents is to press the concession and begin to delay the rest of the law and dismantle it piece by piece.