Obamacare Will Survive This Delay

The White House’s decision to delay a component of Obamacare doesn’t threaten the success of the law. Nor should it distract critics or the administration of President Barack Obama from the real challenge: building insurance exchanges that work.

The administration said it would postpone enforcement of the Affordable Care Act requirement that companies with 50 or more full-time workers provide health insurance that meets minimum requirements of coverage and affordability. Companies that didn’t comply were to pay a fine of $2,000 to $3,000 a worker starting next year; that fine will now be delayed until 2015.

Giving businesses and the Internal Revenue Service more time to prepare for the mandate’s extensive reporting requirements makes sense. Critics of this change are right to note that it’s a win for business, but that doesn’t necessarily mean it’s a loss for employees or the public. Nobody gains from a reporting system that doesn’t work.

Moreover, the practical effect of this delay is limited. Ninety-eight percent of employers with more than 200 workers already offer health coverage; for those with 50 to 199 employees, it’s 94 percent. For companies looking to drop coverage, the penalty, which is a fraction of the cost of health insurance, was unlikely to deter them.

Even if employers were to respond to this change by canceling coverage for a significant portion of workers, that could well benefit the new state insurance exchanges, whose success depends on getting a critical mass of enrollees -- especially healthy ones.

The real downside of this delay is in the politics, not the policy. By conceding to business requests to water down or push back the mandate, the administration has essentially set a precedent for other groups seeking to change the law. This is not a White House renowned for its negotiating acumen. If this change becomes one in a series of last-minute concessions designed to appease critics, it could lead to a weaker law. Besides which, any changes are unlikely to placate those who were, are and will remain fundamentally opposed to Obamacare.

The administration should vanquish those concerns by redoubling its efforts to get the exchanges ready for business starting in October. Those exchanges were already a crucial element of the law; they’re now even more important, in case employers stop offering insurance in greater numbers.

The employer mandate was never the most critical component of the Affordable Care Act. Its value is as much symbolic as practical. Delaying its implementation by a year is unlikely to hurt the law’s broader goals of expanding coverage and controlling cost. As the administration considers further changes or concessions to the law, those are the goals it should keep in mind.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.