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VOL. 128 | NO. 148 | Wednesday, July 31, 2013

Delay of Employer Penalties Will Cost Government $10 Billion

RICARDO ALONSO-ZALDIVAR | Associated Press

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WASHINGTON (AP) – The Obama administration's surprise decision to delay a key requirement of the health care law for employers will cost the government $10 billion, the nonpartisan Congressional Budget Office said Tuesday.

While that's a big number, the report from the official budget scorekeeper for Congress also put the administration's recent move within a wider perspective. Overall, the delay for employers and other changes will raise the cost of the expanding coverage for the uninsured by less than 1 percent over 10 years from the budget agency's previous estimate in May, CBO said.

The White House announced earlier this month that it would delay a requirement for employers with 50 or more workers to offer affordable coverage, or face fines. Instead of going into effect next year, the provision was put off to 2015. A major concession to business groups, the delay took administration allies and adversaries by surprise.

Opponents of the health care law saw the delay as a sign that the implementation of the measure had run into serious problems, and some labor unions denounced it as a handout to big business. But employers welcomed the unexpected respite from complicated reporting rules that the administration concedes will require more time to work out. The White House says the rest of the law's provisions will roll out without delay.

Uninsured people without access to coverage at work will be able to start shopping for a health plan Oct. 1. Middle-class people will be able to pick from a range of private insurance plans, with new federal tax credits to help pay their premiums. Low-income people will be steered to an expanded version of Medicaid, in states that accept it. Coverage takes effect Jan. 1.

At the same time, most Americans will face an individual requirement to carry health insurance or pay fines. That's designed to expand the number of healthy people in the pool, since the law forbids insurers from turning away people with pre-existing health problems.

All told, about 13 million of nearly 50 million uninsured U.S. residents are expected to gain coverage in 2014, according to the latest CBO estimates. That number is expected to gradually increase to between 25 million and 30 million people.

The budget office said fewer than half million people will have to forgo coverage as a consequence of the delay in the so-called employer mandate. The delay "will have only a negligible effect on sources of insurance coverage," the report said.

The government will lose $10 billion in fines that would have collected from employers in the first year of the requirement, the report said. Other last-minute changes by the administration are estimated to add another $2 billion in costs, for a total increase in the cost of $12 billion over 10 years.

However, the impact on the bottom line does not appear to be major – at least in terms of the federal budget.

CBO estimated that the cost of expanding coverage under the law will rise to $1.375 billion from 2014-2023, an increase of less than 1 percent from the agency's previous cost estimate of $1.363 billion.

Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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