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Obamacare Rewrites of Health Law Rile Republicans

Photographer: Joe Raedle/Getty Images

Hisham Uadadeh enrolls in a health insurance plan under the Affordable Care Act on Feb. 13, 2014 in Miami. Close

Hisham Uadadeh enrolls in a health insurance plan under the Affordable Care Act on Feb.... Read More

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Photographer: Joe Raedle/Getty Images

Hisham Uadadeh enrolls in a health insurance plan under the Affordable Care Act on Feb. 13, 2014 in Miami.

President Barack Obama’s repeated postponement of deadlines in the rollout of his health-care overhaul has sparked accusations from Republicans that he’s straying into dangerous territory by rewriting the law.

He’s not the first president to follow his own timetable instead of the one passed by Congress.

From pollution controls and maritime safety rules to financial regulations, delaying enforcement of new laws has become common for presidencies, including those of Ronald Reagan, Bill Clinton and George W. Bush, even in the face of statutory requirements and frequent outcries.

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Deadlines set in laws are “aspirational dates,” said Ross Baker, a political science professor at Rutgers University.

“From a strict rule-of-law perspective, it’s not good,” Baker said. “There ought to be precision, finality.” Still, he said, occasional delays in enforcement of complex legal changes “build a certain amount of flexibility into the system.”

The latest uproar came after the administration’s Feb. 10 decision to wait until 2016 to levy fines on companies with fewer than 100 employees that fail to provide health insurance.

House Speaker John Boehner, an Ohio Republican, said it was akin to “rewriting law on a whim.” Columnist Charles Krauthammer derided the move as “stuff you do in a banana republic.” Said Krauthammer, “It’s as if the law is simply a blackboard on which Obama writes any number he wants, any delay he wants, and any provision.”

Photographer: Andrew Harrer/Bloomberg

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Photographer: Andrew Harrer/Bloomberg

Skirting Election

The Fate of Obamacare

The delay means many small businesses won’t face immediate pressure to comply with the employer mandate in the run-up to this year’s congressional elections. Republicans are using the troubled rollout of the health law, which passed in 2010 solely with Democratic votes, against Democratic candidates in the campaigns for the Nov. 4 election.

Yet the action was within the Treasury Department’s discretion to set rules on new taxes, said Steve Johnson, a professor of tax law at Florida State University.

The Obama administration’s actions are “far from unprecedented,” said Johnson, a former senior attorney for the Internal Revenue Service, which issued the rule last week. “If it ever got into court, the court would be likely to uphold this delay.”

‘A Pattern’

The administration has repeatedly pushed back deadlines and adjusted rules to smooth the introduction of the health-care law, Obama’s top legislative initiative.

The White House already put off the employer mandate once, granting a one-year reprieve last July for all companies from a 2014 deadline. In November, after protests from people whose individual insurance plans were being canceled, Obama asked insurers to renew the policies even if they didn’t comply with the law. Earlier, the administration delayed a new insurance marketplace for small businesses.

Some legal scholars are crying foul, arguing that the effect of all the administration’s regulatory decisions is to weaken the Affordable Care Act, known as Obamacare.

“There is a pattern of this administration making ad hoc decisions to modify implementation of the law so as to soften its impact,” said Jonathan Adler, director of the Center for Business Law & Regulation at Case Western Reserve University School of Law in Cleveland. “It’s one thing after another of altering the way the law is implemented and not implementing it the way it was written or intended.”

Within Law

Still, the administration’s decision breaks no new legal ground, said George Yin, a University of Virginia tax law professor and former chief of staff to Congress’s Joint Committee on Taxation. There are plenty of previous instances of the Treasury Department delaying enforcement of a tax provision beyond a deadline set by Congress, he said.

Yin cited as “analogous” a one-year delay the Treasury Department made in enforcement of a requirement that brokers report the cost basis on investments, postponing coverage of options and debt instruments until this year.

The department holds off on enforcing tax provisions in what he called unusual cases, typically because they raise complex questions about who should be covered or how they should comply.

“In that case, what Treasury has done in the past is delay the consequence, the penalty, that should apply,” Yin said. “From what I can tell, that’s exactly what has happened now.”

Threatening Fine

The 2010 health-care law requires that employers with 50 or more workers provide insurance to their employees, and levies fines of as much as $3,000 per worker on companies that don’t comply. The rule announced last week gives businesses with fewer than 100 employees another year to conform.

To qualify for the one-year delay, employers will have to certify that they haven’t fired workers to get under the threshold. They also must certify they won’t drop health plans they already offer.

Throughout the government, deadlines imposed by law have been far from ironclad.

Regulatory agencies have missed 132 of 280 statutory deadlines in the Dodd-Frank financial-regulatory law passed in 2010, according to a Feb. 3 analysis by the law firm Davis Polk.

Timetables set in the 1990 Clean Air Act Amendments were no more effective.

The law required the Environmental Protection Agency to complete a study of the impact of mercury emissions from power plants on human health within four years and issue new regulations if they were found harmful.

23-Year Wait

The study wasn’t finished for seven years -- three years after the deadline -- and the regulations were only issued last year, 23 years after the law passed.

Another 1990 law, passed in the wake of the Exxon Valdez oil spill, required the Coast Guard to issue new standards for oil tankers within a year. The rules still hadn’t been issued in 2000, when the U.S. Court of Appeals for the District of Columbia Circuit ordered the agency to take “prompt” action.

Even so, the court found that missing the statutory deadline by nine years wasn’t sufficient reason to compel action, and instead relied on a six-point test to determine that the delay was unreasonable.

Courts Defer

U.S. courts historically have been deferential to executive agencies in delays beyond a statutory deadline in enforcing new laws, as long as they don’t believe the agencies are trying to defeat the law, Johnson said.

“Even two years, I don’t think courts will see as problematic,” Johnson said of the latest delay in the health-care law. “They haven’t in other cases.”

No federal court would probably even consider the legality of the move, because it would be difficult to gain the legal standing required to make a challenge.

In tax cases, courts tend to demand that plaintiffs suffer a direct harm as a result of a regulatory decision, Yin said. In the recent delay, the Treasury Department is waiving a penalty, so a taxpayer can’t argue direct harm, he said.

A challenge based on the idea that the plaintiffs are generally affected as taxpayers or based on secondary effects on insurance coverage would probably be difficult to mount.

The missed deadlines reflect a “huge amount of discretion” that Congress grants regulators, said Baker of Rutgers in New Brunswick, New Jersey, who has spent seven sabbaticals working as an aide to both Democratic and Republican lawmakers.

“Congress is unwilling to come in and be the clockmaker,” he said. “They don’t advertise this. They don’t want to be known as putting vague requirements out there. But as a practical point of view that’s what happens.”

To contact the reporter on this story: Mike Dorning in Washington at mdorning@bloomberg.net

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

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