Sunday, July 7, 2013

1,379 Days Is Still Not Enough Time

The Obama Administration announced on the eve of the Independence Day holiday that it was delaying for one year the employer mandate provision of Obamacare.

This is the provision that requires all employers with more than 50 employees, working at least 30 hours a week, to provide their employees healthcare coverage or pay a  $2,000 per year penalty  tax per employee if they don't offer affordable health insurance to their workers.

I had written earlier this year that I thought it was possible that the Obama Administration would delay parts of the bill in that they would not be ready to implement provisions of the law.  That has become a reality.

A few observations...

The explanation of the one-year delay decreed by the President is supposed to allow the Internal Revenue Service time to figure out "how this mandate will is important to do this right than to do it quickly."

In other words, there has not been enough time. Let's put this in context. World War II, from the bombing of Pearl Harbor to V-J Day was 1,347 days. Obamacare was signed into law on March 23, 2010. As of January 1, 2014 (the legislative effective date for the employer mandate) it will have been 1,379 days.

That's right. The Obama administration will have had more time to implement the provisions of Obamacare than it took the United States to totally defeat Germany, Italy and Japan in World War II! And they still say they have not had enough time to get Obamacare totally up and running?  Where is FDR and Harry ("The Buck Stops Here") Truman when you need a good Democrat to get something done?


The language of the Affordable Care Act sets out in clear language in Section 1513 that its provisions "shall apply to months beginning after December 31, 2013." Why does the President of the United States believe he has the power to just ignore the plain dictates of the law? Remember this is a President who took an oath of office less than six months ago as follows...

"I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect and defend the Constitution of the United States."

Faithfully executing the office of President of the United States would seem to mean following the laws that he proposed, pushed for and signed.

As Ed Morrissey points out, George W. Bush, if you asked the Democrats, was supposed to be the Imperial President.

Waiving one mandate without the other not only offends the rule of law, it completely disrupts the delicate fiscal scheme that Congress created to keep costs in line. Democrats used to complain about the “imperial Presidency” of George W. Bush when he acted completely within his constitutional authority. This demonstration is a much clearer example of an administration that manipulates law for its own political purposes, even laws demanded by President Obama himself.


There are several major implications of not enforcing the employer mandate under the law.

First, is the revenue implication.  The employer mandate penalty tax was expected to raise about $10 billion in revenues per year in its first year.  This is money that will no longer be available to help fund the program.  The books were never balanced on Obamacare to begin with.  It will be an even bigger drain on federal and state budgets.

Second, subsidies for health care insurance coverage in the exchanges are only supposed to be available to individuals who do not receive affordable insurance from an employer.  However, those employers have now been relieved of their obligations to provide coverage and also to provide any records on employment.  Therefore, the government now has no way of knowing who is eligible for subsidies and who is not.  The White House says that this will now be done on an "honor" system where the state exchanges will be required to take the word of the individual on both their eligibility for employer coverage as well as their income.  I know how this is going to work out.  And it is not good.

The bottom line is that Obamacare is going to have very little administrative or management oversight when it is implemented in January, 2014.  Expect a lot of fraud, free rides and fumbles along the way similar to most governmental programs we are familiar with.

I have no doubt that the information technology challenges facing the Obama Administration in constructing the data interfaces involving employer information were a major reason for the delay in the employer mandate.  However, the political implications were undoubtedly even more serious for them.

Consider the unemployment numbers that came out for June.  Mike Shedlock has done a great analysis.

The headline number sounded respectable with a gain in employment of 195,000 in the establishment survey and a gain of 160,000 in the household survey.  However, a look beneath the surface does not look good and the Obamacare employer mandate could not have helped.

If you look at the 160,000 household survey job gain number, it is composed of a gain of 486,000 in part-time jobs and a loss of 326,000 full-time jobs!

You have to ask yourself the question as to how many employers are cutting back employee hours below 30 hours to avoid Obamacare?  It would seem that the Obama Administration must have asked the same question.  The delay in the employer mandate may be their answer to this political problem.

By the way, there are now 8,226,000 workers who are working part-time but want full-time work.   There are also an all-time record of 28 million part-time workers in total.

For further information on this subject see my post from May, "The 29-Hour Work Week".

Credit: Federal Reserve, St. Louis

At this point, you have to ask what is next?  Will the Individual Mandate be delayed for a year as well?  It will be interesting to watch this play out as individuals assess the choices and costs of Obamacare beginning in October.   If the hue and cry from the voting public is large enough, anything can happen.

Stay tuned.  How long are Democrats are going to keep sailing on the S.S. Obamacare?  Right now the ship is listing badly.  Captain Obama will throw as many things overboard as he can to keep it from sinking.  However, you can be assured that all Congressional Democrats will not be willing to sacrifice themselves to keep it afloat if the waves of public opinion start overwhelming the ship.  Therein will determine the ultimate fate of Obamacare and whether this cruise ever reaches a safe port.

No comments:

Post a Comment