Editor’s note: A shorter version of this opinion piece appeared under a different title in the Idaho Statesman's Sunday editorial section.
The Obama administration recently decided to delay one provision of the Patient Protection and Affordable Care Act (PPACA), the healthcare reform law enacted in March of 2010, that was to take effect Jan. 1.
The provision requires that employers with 51 or more full-time employees offer insurance to their employees or pay a penalty of about $2,000 per employee.
The provision will now take effect Jan. 1, 2015. The administration made clear that all other provisions of the law will continue on schedule.
Why the delay?
Officials say the delay will provide time to simplify the reporting requirements for employers.
The provision is more complicated than it appears at face value. A full-time employee is one who works 30 or more hours a week. There are requirements that the benefits of the offered insurance must satisfy in the form of minimum essential coverage and the plan must be affordable to the employees, meaning that it must not cost more than 9.5 percent of their household income.
How businesses were expected to report all of this information, and how the government was expected to enforce all of these requirements, by the end of the year led to tremendous pressure on businesses, especially small ones, and in turn, on the government to delay the provision.
Is this a big deal for healthcare providers?
Yes and no.
When the delay was announced, stocks of publicly traded for-profit hospitals declined from 3 percent to 5.5 percent. The interpretation can be that the delay will mean that there will be fewer insured workers and therefore, less access to health care and higher bad debt for those who do require significant services for one more year, on top of the concern that perhaps half of the states will not expand their Medicaid programs.
The combination could mean that far fewer people will be insured than lawmakers expected when the law was enacted, and payment cuts that hospitals offered up at the time of the negotiation of the healthcare law in exchange for a promise that 23 million more Americans would be ensured are already beginning. Based on the delay and the previous decision by the Supreme Court that states may choose not to expand their Medicaid programs, the administration now is hoping that 7 million uninsured Americans may be insured next year, far fewer than the 23 million intended.
On the other hand, 98 percent of large employers, meaning 200 or more full-time employees, and 61 percent of small employers with three to 199 employees already offer their employees insurance. And again, businesses with fewer than 51 employees are not subject to the requirement. The American Hospital Association has estimated that only about 10,000 businesses around the country would be subject to the provision and currently do not offer their employees insurance; primarily these businesses are in the retail, entertainment, restaurant, agriculture and farming, and hospitality industries.
The personal requirement to have insurance or pay a penalty, the individual mandate, still goes into effect on Jan. 1, and the insurance exchanges are required to be operational Oct. 1 for a Jan. 1 start date. Employees who do not have access to insurance through their employer are to be directed to the health insurance exchange to determine whether they qualify for Medicaid or a subsidy towards the purchase of insurance and to purchase a plan.
Is Obamacare on the ropes?
I wouldn’t make that bet.
There is no doubt that the Patient Protection and Affordable Care Act (PPACA) has suffered a number of setbacks:
By then, it will be fully implemented.
David C. Pate, M.D., J.D., is president and CEO of St. Luke's Health System, based in Boise, Idaho. Dr. Pate joined the System in 2009. He received his medical degree from Baylor College of Medicine in Houston and his law degree from the University of Houston Law Center.