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Experts: Obamacare Delays Increasing Costs

Expert says delay will increase the law's impact on the federal budget

AP
• July 10, 2013 3:00 pm

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The effects of the Obama administration’s decision to delay the employer mandate portion of the healthcare overhaul will ricochet throughout the law and the rest of the government, health care experts told Congress on Wednesday morning.

Healthcare policy and law experts as well as small business representatives testified before the Health Subcommittee of the House Ways and Means Committee about the administration’s one-year delay in implementing the law’s requirement that all businesses with more than 50 employees provide health insurance.

No administration officials testified at the hearing to defend the decision.

"This law is literally just unraveling before our eyes," said Rep. Paul Ryan (R., Wis.), calling the law’s implementation a "total fiasco."

The delay will increase the law’s impact on the federal budget, said James Capretta, a fellow at the Ethics and Public Policy Center.

The government will likely bring in less money through the penalties that some businesses would have to pay for not providing insurance, according to Capretta.

The CBO had predicted that the government would pull in about $10 billion in 2014, he noted.

The delay will also likely increase the amount that the government will pay in subsidies to those purchasing insurance through exchanges, further weighing on the federal budget, Capretta said.

The employer mandate delay will also hurt the government’s ability to enforce the individual mandate, noted Avik Roy, a fellow at the Manhattan Institute.

"(The Affordable Care Act’s) individual mandate only works if the government can verify whether or not a worker is full-time or part-time, whether he has been offered ‘affordable’ or ‘unaffordable’ coverage, or none at all," Roy told the committee.

Representatives of the small business community complained about the burdens that the law is putting on them and the confusion that the law’s complexity is creating.

"While my fellow small business owners and I applaud the administration for delaying the implementation of the employer mandate due to the continued ambiguity of the law and its compliance requirements," said Sean Falk, who owns several franchise businesses, "it does not solve the fundamental problems associated with the ACA and its impact on business operations and future job growth."

Falk contended that the law’s employer mandate requirements are depressing hiring among small businesses and encouraging them to reduce the hours of those on payroll.

William Dennis, representing the National Federation of Independent Businesses, also highlighted the perverse incentives the employer mandate creates, and the confusion that the law created among small business owners.

When asked what the effect of the law has been on the economy, Capretta said he could not cite any specific figures, but he argued that a general trend is emerging.

"The direction is clear: It’s negative," Capretta told the committee.