Business leaders had warned that the reporting requirements for firms with 50 or more full-time employees were too complicated, and some had threatened to reduce their workers’ hours — employees that work 30 or more hours a week are considered full-time under the act — or refuse to expand their business in order to dodge the 50-employee threshold to avoid having to provide insurance for their workers.
The cumbersome reporting requirements threatened Arizona’s economic recovery, said Rick Murray, CEO of the Arizona Small Business Association. Businesses now have another year to figure out how to provide insurance for their employees without the threat of paying thousands of dollars in fines.
But aspects of the delay are bound to cost the federal government billions of dollars, officials warned, and the business community’s victory in convincing the White House to delay implementation could embolden businesses to request even more concessions from the Obama administration.
The Congressional Budget Office estimated fines from employers who failed to follow the mandate to provide affordable coverage for employees in 2014 would have brought in $10 billion.
And without insurance from their employer, more Arizonans who don’t qualify for Medicaid and aren’t provided insurance by their employers will be eligible for federal subsidies to help them purchase insurance on their own, either privately or on the federal health care exchange.
The loss in revenue from fines and increased subsidies to residents in Arizona and nationwide could have an impact on the rates provided to customers of the health care exchanges.
Arizona employers with more than 50 full-time employees, or 50 full-time equivalent employees, would have been fined $2,000 per full-time employee had they not prepared to offer insurance to their workers by January 2014.
Employers now have until 2015 to prepare to either offer insurance or pay the fine.
“It certainly helps those small businesses figure out what will be available to them,” Murray said. “And by giving them that year, some of those private insurers will have a better handle on what they’ll have on the private market.”
Murray was quick to point out that the delay won’t affect most Arizona businesses. Roughly 95 percent of businesses in the state with 50 or more employees already provide insurance to their workers, according to a 2012 Kaiser Family Foundation survey.
Roughly 29 percent of Arizona businesses with fewer than 50 employees also offer their workers insurance, the survey found.
And employees for the remaining 5 percent of businesses in Arizona will have some help finding insurance. Health and Human Services Secretary Kathleen Sebelius was in Arizona on July 10 to announce $2.3 million in federal funding for health centers to assist Arizonans seeking insurance.
Rates on the federal exchanges are expected to be revealed in September, with enrollment scheduled to begin in October. Murray said he’s cautiously optimistic that the rates will be lower than Obamacare critics have claimed.
However, the delay has already provided fuel for critics of the law, and could trip up future efforts to continue implementing the law, despite the administration’s insistence that everything else is on schedule.
And providing the business community a $10 billion break could spur other groups impacted by the Affordable Care Act to seek their own reprieve — a move that could add further costs to an already expensive program, said Don Hughes, Gov. Jan Brewer’s deputy director of policy on health care.
“I think it gives momentum to some of the other groups that have either fines or taxes imposed on them to say, ‘You need to exempt us as well,’ or ‘You need to delay our fines as well,’ and that could have a trickledown effect of funding the Affordable Care Act,” Hughes said.
While many Republicans are renewing the same old calls for repeal of the law, Hughes said it’s still too early to know how the implementation will play out.
Until then, most Arizona businesses impacted by the law will maintain their current offers of medical benefits to employees. Both Murray and Hughes agreed it’s unlikely businesses would try to take advantage of a lack of fines in 2014 by dropping employees from their coverage — and the small business community should be able to continue to grow and boost Arizona’s economy, Murray said.
But further delays in implementation could trigger even greater unrest in the business and health provider communities, which are already wary of the government’s ability to implement the law in a timely and effective fashion.
“It’s kind of been a hallmark of (the Obama) administration, that they’ve pushed something forward and not been able to deliver,” said lobbyist Gibson McKay. “From any business perspective, you want to be able to depend on the credibility of your government, whether you’re talking about taxes or regulation or policy as it pertains to Egypt.”