Wednesday, July 03, 2013

Why Obamacare Delay? Because HHS and IRS Fumbled Rollout

Oh, but that's not exactly what the headline says in this Forbes article:

Why Obamacare Delay? Because Half Of EmployersAren't Ready for Rollout

Half of employers not prepared to administer the employer mandate starting in January? Yeah, probably true.  But - the headline says the delay is because of employer unreadiness.  I think the headline is misleading; it promotes a superficial reason and ignores meaningful underlying reasons for why so many employers are not ready.

What meaningful, underlying reasons?

For starters, the reason many employers are not prepared is because of late-issued HHS and IRS regulations.  Over the past 3 years the agencies often missed their target dates for release of proposed regs, while employers waited.  Add to that the sheer length and typical bureaucratic opacity of the proposed regs when they did emerge, which required lengthy analysis by employers to determine just what the proposed regs asked them to do.

Another factor affecting employer readiness has been legitimate debate over the proposed regs when they were eventually released. As employers began to realize the profound impact on their businesses, they have appealed, demanded hearings, and filed suits to get the proposed regs withdrawn or substantially modified. The obvious example is the ongoing outcry against the requirement to cover contraception (which is nowhere found in ACA) - and there are other examples as well.

Keep in mind this is not the first time HHS was forced to interrupt the planned progress of ACA implementation. Just one example: new enrollment in the individual high-risk pools was stopped because HHS ran out of money (even though only a fraction of the expected population actually enrolled).

On balance therefore it seems to me the principal reasons HHS and IRS are forced to defer the employer mandate comes right back to their own front doors.  Employers were not ready largely because HHS and IRS did not perform their responsibilities in a timely manner.

As to the political convenience of avoiding controversy for the 2014 elections – if ACA implementation were going smoothly and on plan, that would be a political plus, not a minus. So I don’t see politics as fundamentally driving the decision to defer the employer mandate.   Politics plays its part, but I think  the underlying reason is the inability of HHS and IRS to issue timely regs, and otherwise to implement ACA as required by the legislation in the first place.

In my book, this latest decision to defer a key part of Obamacare is just more evidence of an ongoing bureaucratic mismanagement debacle.  And little anyone has seen can give confidence that HHS and IRS will be able to manage Obamacare any better, once it is, finally, implemented. Whenever that happens.
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