Delay of employer penalties will cost gov't $10B
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 put the administration's recent move within a wider perspective: It adds up to an increase of less than 1 percent in the 10-year cost of the law.
Earlier this month, the White House announced earlier that it would delay a health law 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.
Republican critics seized on the delay as evidence that the law is not working, and spent over an hour in coordinated speeches in the Senate attacking it as a threat to the economy.
Sens. Mike Lee of Utah, Ted Cruz of Texas and Marco Rubio of Florida have all signed a letter opposing any must-pass spending bill at the end of the budget year in September that includes funding for the health care law, and used their remarks to appeal to the public to swing behind them.
"Right now we don't have the votes in this institution," acknowledged Cruz. But he said if "enough Americans speak out and demand of their elected officials that we do the right thing ... I am confident we will."
Trying to link the fate of the health care law to legislation needed to fund the government is controversial within Republican circles, since it could lead to a partial shutdown of the federal government.
Some labor unions have denounced the delay 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 administration says the rest of the law's provisions will roll out without delay. White House spokeswoman Jessica Santillo said the law's coverage expansion is more than fully paid for and will reduce the federal deficit by more than $100 billion over the next 10 years. Moreover, health care costs have been growing at historically low rates.
Under the law, uninsured people without access 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 coverage 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.
The CBO estimated that the net 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 in May of $1.363 billion.
Some of the other recent changes in regulations issued by the administration loosened procedures for verifying the incomes of people applying for health insurance tax credits.
However, the CBO and the congressional Joint Committee on Taxation estimated that easing the rules "will have only a slight impact" on the accuracy of income reporting because the Internal Revenue Service still will be able to identify discrepancies during tax filing season.