WASHINGTON — The White House just swapped one political headache for another.
By delaying a requirement that all large employers provide health insurance, the Obama administration heads off the unseemly spectacle of companies vowing to cut jobs or workers’ hours to avoid the costly mandate.
But the late Tuesday action is not a free pass: It contributes to critics’ allegations that the White House does not have the ability to launch its biggest legislative accomplishment on schedule.
“You trade off one set of painful stories for another set of painful stories,” Bob Kocher, a former Obama health-policy adviser, said. “I would think that, if I’m an administration official today, it’s a way more troublesome news story for people to say that we’re not ready to launch.”
For years now, employers have rallied against the requirement that businesses with more than 50 workers provide health insurance benefits to all employees who work more than 30 hours per week.
From retail chains to school districts, many said they would cut work weeks below the 30-hour threshold to dodge the new mandate. Lawmakers on Capitol Hill began drafting a bipartisan bill that would weaken the employer mandate, applying it to those who worked more than 40 hours a week.
Coverage of those efforts came with a harsh message during a time of economic stress: The president’s health-care law was leading to workers losing hours — or losing their jobs altogether.
“You were already seeing it, whether it was some of the restaurants earlier this year to teachers’ aides in the press,” Neil Trautwein, vice president at the National Retail Federation, said. “Potentially, you would have seen more stories on this.”
Trautwein had multiple meetings with the administration and legislators in which he raised those potential consequences of the health law provision, he said.
“If you set a hard 30-hour limit for eligibility, you encourage employers to cut where they can,” Trautwein said. “You’re not going to cut willy-nilly, but potentially you increase your part-time workforce.”
Delaying the employer mandate until 2015 essentially puts an end to those actions for one year. While the Treasury Department cited concerns about the “complexity of the requirements” as the reason for the delay, observers saw a political motivation as well.
“I think this is less about readiness and more about the fact that they’re trying to be flexible in their implementation,” said Rhett Buttle, vice president at the Small Business Majority, which supports the Affordable Care Act. “It does seem like an olive branch.”
At the same time, health-law supporters worry that the decision to delay will only advance a narrative that the administration will not be ready for October, when Americans are set to begin enrolling in the health law’s new marketplaces.
“This seems like an easy thing,” said Kocher, the former Obama adviser. “The fact that there might be an administrative reason why this is hard is worrisome. This is a hell of a lot easier than calculating premium subsidies.”
This is the second major delay for the Affordable Care Act. Earlier this year, Health and Human Services put off implementing a health law provision that would have given employees of small businesses more choices of coverage plans. Workers on federally run marketplaces will now have to enroll into the health plan their employer chooses.
Tuesday’s action could also increase the law’s overall price tag if more employers decide to drop coverage and move their workers into the public health exchanges, which would increase the need for federal subsidies.
“I don’t think it’s the end of the world if [the employer mandate] isn’t there, but I hope people don’t complain when the cost of the law goes up,” said John McDonough, a Harvard professor who once served as Sen. Ted Kennedy’s health policy adviser. “This is not a freebie.”
Others dismissed concerns that employers would drop health coverage without the law’s mandate. The vast majority of large businesses already provide insurance to their workers, without any federal requirements to do so.
McDonough said he worries that the provision could be delayed even further.
“Politically, it won’t get easier a year from now, it will get harder,” he said. “You’ve given the employer community a sense of confidence that maybe they can kill this. If I were an employer, I would smell blood in the water.”
Within minutes of the White House announcement, some employer groups were already making further demands. The International Franchise Association praised the delay, which it had lobbied for, but also said it did not go far enough.
“We need to make sure that we don’t forget that this is still a problem,” IFA’s Judith Thorman said. “There is still the definition of [what constitutes] a full-time employee that we’re going to try and pursue. That’s a significant issue for us.”