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House Subcommittees Examine Impact of PPACA Mandate Delay

By Bill Leonard  7/29/2013

Depending on whom you ask, the one-year delay in implementing a key provision of the federal health care reform law is either totally frustrating and confusing to U.S. employers or is having little impact at all.

To get a clearer picture of the effect on employers, two House subcommittees met on July 23, 2013, to discuss the Obama administration’s decision to postpone the effective date of the employer mandate to provide health coverage and related reporting requirements under the Patient Protection and Affordable Care Act (PPACA). The provisions, sometimes known as “pay-or-play,” are now set to take effect on Jan. 1, 2015, and will give organizations with 50 or more full-time workers the option of offering employees and their families health care benefits or paying a penalty.

The decision to delay the mandate was announced in a Treasury Department blog entry on July 2. Critics of the health care reform law claim the postponement demonstrates that the law is unworkable and too complicated; supporters of the administration’s action say the delay is typical when rolling out a major reform to federal law.

“The delay provides workplaces a temporary reprieve from an onerous mandate; however, it does not alter the fact the law is fatally flawed,” House Subcommittee on Health, Education, Labor and Pensions (HELP) Chairman Phil Roe, R-Tenn., said in his opening remarks at the hearing. “Regardless of when this employer mandate is implemented, it will destroy jobs and force Americans to accept part-time work when what they desperately need are full-time jobs.”

Members of the House Subcommittee on Workforce Protections joined the HELP subcommittee to listen to testimony from expert witnesses and ask questions about the delay’s impact.

Grace-Marie Turner, president of the Galen Institute, a nonprofit that focuses on market-based health reform, said the decision to postpone the reporting requirements for the mandate is creating new questions and concerns for business owners and their workers.

“Employers are more confused than ever about what their responsibilities and liabilities are during this period of ‘transition relief’ from the reporting requirements,” she testified.

Turner said that regulations outlining details of the delay and what employers must do to comply with the changes are not expected until later this summer, adding further uncertainty on how to comply with the law.

In her testimony, Turner claimed that postponing the effective date will not alter the fact that many businesses have scaled back hiring as they wait for the full effect of the health reform law. She noted that even labor unions have begun to criticize the law and have warned of dire consequences and disruptions to health care coverage for unionized workers.

Jamie Richardson, vice president of government, shareholder and community relations for White Castle System Inc., supported Turner’s assertions. Testifying on behalf of the National Restaurant Association, Richardson told subcommittee members that the health care reform law had forced his company to scale back its expansion plans.

“In the five years prior to the health care law, we were opening an average of eight new White Castle restaurants each year,” he said. “In 2013 we plan to open just two new locations. While other factors have slowed our growth, it is the mounting uncertainty surrounding the health care law that brought us to a standstill.”

Richardson was highly critical of the law’s provision that defines full-time employment as 30 hours per week. He said that restaurant employees depend and thrive on flexible work schedules and that the new requirement would create problems for restaurant operators and their employees.

“As a result of this new threshold, employers with variable workforces and flexible scheduling will be forced to alter their practices and be deliberate about scheduling hours due to the greater financial impact and potential liability for employer penalties if employees who work full-time hours are not offered health care coverage,” he said

Although PPACA critics painted a grim picture during the hearing, Ron Pollack, executive director of Families USA, testified that the delay most likely wouldn’t have any significant impact on the law’s implementation. He explained that most employers affected by the pay-or-play mandate already provide health coverage to their workers.

“Ninety-eight percent of employers with 200 or more employees and 94 percent of employers with 50 to 199 employees already offer their workers health insurance,” he said. “These employers are offering coverage absent any federal mandate or associated penalty. So there is no reason to believe that this will suddenly change because the employer mandate is delayed for one year.”

As expected, Democrats on the subcommittees downplayed the delay and criticized Republicans for attempting to repeal the PPACA instead of focusing on reducing the nation’s unemployment rate.

“So far the majority is zero for 38 in repealing the health care law. There are other issues confronting the nation, like getting people back to work and guaranteeing them a good job and chance for a brighter future,” said Rep. Rob Andrews, D-N.J., ranking member of the HELP subcommittee.

Bill Leonard is a senior writer for SHRM.

Related Articles:

Opportunities Seen for Health Care Reform Bipartisanship, SHRM Online Benefits, July 2013

Employer Mandate Delayed Until January 2015, SHRM Online Benefits, July 2013

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