Obama Shields Democrats From Unpopular Health-Care Law for 2014

The Obama administration’s decision to delay part of its health-care overhaul may help protect Democrats in next year’s elections even as it fuels Republican arguments that the law is fatally flawed.

Still, critics and supporters alike said the law’s impact on the 2014 congressional elections will depend more on how easy it will be for millions of uninsured Americans to obtain subsidized coverage, which they’re required to do on Jan. 1.

The administration said on July 2 it will postpone enforcement of the so-called employer mandate until 2015, giving businesses an extra year to comply with a requirement that they provide workers with insurance or pay a penalty. Officials cited a desire to streamline employers’ reporting requirements and give them time to adjust.

The delay eases “the cranky businessman problem,” said former Democratic Party chairman Howard Dean. “New things are hard, and this was going to be hard to implement.”

Republicans seized on the move, which comes atop other setbacks, as evidence that President Barack Obama’s chief domestic initiative is plagued with problems.

House Speaker John Boehner, an Ohio Republican, called the announcement “a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms.”

The law passed in 2010 solely with Democratic votes.

Government Overreach

AFL-CIO President Richard Trumka said the delay is “troubling,” raising concerns that the postponement would remove incentives for employers that don’t provide insurance to add coverage next year.

Republicans have fought the health-care overhaul at every turn, seeking to make it a symbol of government overreach. Republican-controlled state legislatures and governors have refused funding to expand Medicaid coverage for the poor, as provided for under the law, and declined to set up exchanges -- the marketplaces where individuals can buy insurance -- leaving that job to the federal government.

Only 16 states have agreed to set up the exchanges. And 24 states have refused to expand Medicaid, according to Kathleen Sebelius, Obama’s secretary of health and human services.

In March, the administration said small businesses wouldn’t be able to give their workers a choice of health plans in exchanges set up just for them. In January, a plan to create new nonprofit insurers in states was curtailed after Congress capped funding for the companies.

Unpopular Law

The health-care overhaul has been unpopular with Americans: A Gallup Poll taken June 20-24 showed 52 percent of the public disapproves of the law while 44 percent approve. The survey of 2,048 adults, which had a margin of error of plus or minus 3 percentage points, also showed a plurality of 42 percent think the law will make their family’s health-care situation worse.

Mississippi Governor Phil Bryant, a Republican, said in an interview with Peter Cook on Bloomberg Television’s “Capitol Gains” that the health-care law “we now see is going to be a train wreck.”

Lanhee Chen, an opponent of the law who was policy director for Republican Mitt Romney’s presidential campaign, said the administration’s action was “an embarrassing admission,” though only “a short-term negative” politically.

“The narrative that they have to keep delaying portions of the law is not good for them,” said Chen, who is now a research fellow at Stanford University’s Hoover Institution and a columnist for Bloomberg View. “The administration’s calculus was they preferred to take a political hit now rather than during the midterm elections.”

‘Sensible Flexibility’

Paul Begala, a Democratic consultant who was an adviser to President Bill Clinton, said it would be “easy for Democrats to defend” the delay as “the kind of sensible flexibility the business community has been asking for.”

The delayed employer mandate requires companies with 50 or more workers to offer them affordable insurance or face a fine of as much as $3,000 per employee.

The provision also imposes extensive reporting requirements on businesses such as informing the Treasury Department of the months during which all employees and any of their dependents were covered by insurance.

The Business Roundtable said in a June 11, 2012, comment letter that reporting requirements would demand “substantial changes in administrative procedures and reprogramming of record-keeping systems.”

Most Covered

Ninety-eight percent of workers in firms with 50 or more employees worked for a company that offered health coverage to at least some of its workers in 2012, according to the Kaiser Family Foundation’s Employer Health Benefits Survey.

About 1.4 million Americans that year worked at companies with 50 or more workers that provided no insurance for employees, said Gary Claxton, a vice president of the Kaiser Family Foundation.

Dean, a medical doctor and a 2004 Democratic presidential candidate, said the Republican line of attack based on the delay is a “short-term complaint” that would fade long before the November 2014 congressional elections. Republicans control the U.S. House, while Democrats have a majority in the Senate.

“The key for the Obama administration is the federal exchange, because so many of the states refuse to put the exchanges in,” Dean said. “If the exchanges work, Obamacare will not be a liability” for Democrats.

If more people receive coverage and are satisfied, then continued broadsides against the health-care plan will hurt Republicans, Dean said.

Quick Impact

“Come about February of 2014 there are going to be a tremendous number of people who have health insurance who don’t have it today,” Dean said. The political impact will be “pretty quick, like much quicker than before the election.”

Chen said the experience of Americans with the mandate for individual coverage that still takes effect in 2014 would override other concerns well before the election. Though the Obama administration disputes the analysis, Chen and other critics predict a surge in insurance costs.

“That’s the most tangible impact people can feel,” Chen said. “You’re going to see a lot of Americans very displeased over how much they have to pay for health care come Jan. 1.”

House Energy and Commerce Committee Chairman Fred Upton, a Michigan Republican, said yesterday he’s starting an investigation into the administration’s decision to postpone enforcement of the employer mandate.

“You know things are bad when you can’t even successfully implement your own bad ideas,” Governor Bobby Jindal of Louisiana, a Republican, said on Twitter.

‘More Uncertainty’

With enforcement of the employer mandate delayed, John Feehery, a Republican strategist in Washington, said he would tell the party’s congressional candidates to use a message similar to one Romney tried in the 2012 presidential campaign.

“You talk about how this leads to more uncertainty and makes it even harder for employers to plan for the future and decide whether to hire,” he said. “This will have an impact on the election.”

To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net; John McCormick in Chicago at jmccormick16@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net

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