Does Obama Have the Power to Delay His Mandate?

Evan Soltas is a contributor to Bloomberg View.
Read More.
a | A

Employers won't be required to purchase health insurance for their employees next year, the Barack Obama administration said in an announcement yesterday. The decision, more specifically, is to defer the tax-reporting requirement in the Affordable Care Act that makes the mandate enforceable.

This raises the question: Can the administration do that?

It isn't altogether clear it has the statutory authority in the health-care law to waive the requirement. If it doesn't, the move could be challenged in court. In either case, it could set a precedent for a level of executive discretion in the law that the administration probably won't like.

Section 1513 of the law, which lays out the employer mandate, states unambiguously that it is set to begin Dec. 31, 2013. However, that isn't technically the part of the law that Mark J. Mazur, an assistant secretary in the Department of the Treasury, said was being deferred.

It's the reporting part. Here, the law begins to get fuzzy -- which might be exactly why the administration is taking this roundabout path. They might think they have authority to suspend reporting but not the mandate.

Section 1514, which governs employer reporting of health-insurance coverage, says: "Every applicable large employer required to meet the requirements of section 4980H with respect to its full-time employees during a calendar year shall, at such time as the Secretary may provide, make a return." The section also sets the same start date for reporting requirements.

One way to read this -- and the way it was probably intended -- was that the secretary of the Department of Health and Human Services, Kathleen Sebelius, would determine when in 2014 employers would file their insurance reports. That's consistent with her discretion under other parts of the law to determine how employers file. Under this interpretation, employers would still be required to insure their employees for all of 2014 even if Sebelius had them file on New Year's Eve.

Another way to read the passage is as a blank check to postpone the mandate by as long as a year. That comes from the key part: "during a calendar year, shall, at such time as the Secretary may provide."

Yet, a third way to read it: If "during a calendar year" is read to modify "employees" and not "at such time" then the Secretary could have the power to defer the mandate indefinitely.

I happen to find the first reading the most plausible. But the only way to know which interpretation is right is for someone to file a lawsuit against the administration. As Forbes' Avik Roy writes, it isn't clear who would do that. Business is pleased the mandate is delayed and that may lead Republicans to keep quiet. Democrats running for re-election are happy to dodge a potential opposition advertisement droning on about how Obamacare caused local business X to fire employees so could escape the mandate (which only applies to large firms).

New York University law professor Richard A. Epstein thinks that a larger problem will be to find someone with standing to sue against the delay. "It's a very strange phenomenon in administrative law. If you imagine there's a direct violation of statute, there should be a party who could sue," Epstein said. "But doctrines of standing don't allow that to happen easily for the non-enforcement of laws."

"Name me someone you think really does have standing," Epstein continued. An employee? No. A competing firm? No. I'm just hard pressed to identify a party who does."

Even if a lawsuit made it through these hurdles, Georgetown University law professor Randy Barnett -- whose writings played a major role in the Supreme Court's opinion on Obamacare last year -- is skeptical that courts would force the Obama administration to comply with the employer mandate. "It's hard to make the executive branch do something. They would have to have a mandamus to make them apply this law," he said. "I don't know if they technically can, but as practical matter, they aren't likely to do that."

The more interesting issue is what precedent the decision sets. If the enforcement of the mandate is indeed discretionary, then a future Republican president will be tempted to pull the same trick.

"So tell me again why a future Republican administration can't just waive Obamacare" said Barnett.

Why not?

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the author on this story:
Evan Soltas at