Obamacare Mandates Delayed -- And That Other Shoe

Well, it certainly comes as happy news to this correspondent that the Administration announced this week it will delay health insurance mandates on businesses.  Our company has spent a ton of time since last November trying to minimize the expected cost of the mandates -- the initial cost estimates of which for our business came in at three times our annual net income.  Our preparation has been hampered by the fact that the IRS still has not finalized rules for how these mandates will be applied to a seasonal work force.  Like many retail service businesses, we have studied a number of models for converting most of our work force to part time, thus making the mandates irrelevant for us.

I know this last statement has earned me a fair share of crap in the comments section as a heartless capitalist swine, but the vitriol is just absurd.   Many of the folks criticizing me can't or don't want to imagine themselves running a business, so let's say you have an annual salary of $40,000.  Now, on top of all your other expenses, the government just mandated that you have to pay an extra $120,000 a year for something.  That is the situation my business is in.  Are you just going to sit there and allow your savings to become a smoking hole in the ground, or are you going to do something to avoid it?  Unlike the government, I cannot run a permanent deficit and I cannot create new revenues by fiat.  Congress allowed business owners a legal way to avoid the health insurance mandate, and I am going to grab that option rather than be bankrupted.  So are every other service business I know of, which is why I have predicted that full-time jobs are on the verge of disappearing in the retail service sector.

Anyway, it appears that the IRS and the Administration could not get their act together fast enough to make this happen.  Not a surprise, I suppose.  You and I have both been in committee meetings, and have seen groups devolve into arguments aver useless minutia.  This is not a monopoly of the government, it happens in the private sector as well.  But in the private sector, in good companies, a leader steps in and says "I have heard enough, it is going to be done X way, now go do it."  In government, the incentives work against leaders cutting through the Gordian knot in this way, so the muddle can carry on forever.

There are at least two more shoes that are going to drop, one bad, one good:

  1. On the bad side, while companies like mine complain about the cost of the PPACA, they are going to freak when they see the paperwork.  My sense is that we are going to be required to know in great detail what kind of health insurance policy every one of our employees have, even if it was not obtained through our company, and will have to report that regularly to the government.  In addition, there are gong to be new reporting requirements to new agencies for wages and hours.  It is going to be a big mess, and my uneducated guess is that someone in the last week or so looked at that mess and decided to hold off announcing it.

    But readers can expect a Coyote freak out whenever it is announced, because it is going to be bad.  Wal-mart will be fine, it has the money to build systems to do that stuff, but companies like mine with 500 employees but only 2 staff people are going to get slammed.  There is a reason government agencies, even government schools, have more staff than line personnel -- they live and breath and think in terms of complex reporting and paperwork.  They love it because for many it is their job security.  Swimming every day in that water, it is no surprise they impose it without thought on the private sector.  This makes it hard for companies like ours that try to have 99% of our employees actually serving customers rather than pushing paper.

  2. The individual mandate is toast for next year.  No way it happens.  If the Administration cannot get the corporate piece done on time, there is no way in hell it is going to get the exchanges up and running.  And even if they do, some prominent states with political influence with this President, like Illinois and California, likely will not get their exchanges done in time and will beg for a delay.
  • Ombibulous

    My initial reaction was the delay had little to do with trying to cut business owners a break and everything to do with not harming the Dems prospects in the midterm election next year.

    I mean really, when did lack of administrative preparation ever stop the orcs in Mordor-on-the-Potomac from implementing one of their wicked plans?

  • http://thegameiam.wordpress.com David

    You owe me a keyboard. I live in DC, and "Mordor on the Potomac" is probably the funniest nickname for the place I've ever heard. Hat's off to you!

  • Chinese Camp

    Another point is all the energy lost trying to optimize against an ever changing set of laws, and now an ever changing subset of which laws are actually going to be enforced.

  • Rick Caird

    The other question is the black letter law that requires the employer mandate to start on 1/2014. Obama really needs Congressional legislation, but I expect they are afraid to open it up for any changes.

  • bknewyork

    I'll bet that the majority of new jobs showing up in the non-farm payroll numbers are actually full time staff being converted to part time. Like cell mitosis, but without the benefits.

  • MingoV

    "Congress allowed business owners a legal way to avoid the health insurance mandate..."

    I speculate on why Congress and Obama would do this.

    1. Fewer businesses will offer health insurance, therefore more workers are forced to use the government-run exchanges. Voila! Instant increase in government.

    2. More people are forced into part-time work. Businesses must hire more employees to get the same amount of work completed. Hiring and maintaining more employees increases costs and either decreases profits or causes prices to rise. This hurts the economy, and a damaged economy is an opportunity for government to gain power.

    3. The people now working part-time may no longer have enough income to get by. They may fall below the cut-off value for various forms of government aid. More people getting aid increases the size of government.

    ObamaCare is a massive win for the political left. It greatly increases the size and scope of government. ObamaCare is run in a fascist manner: most health care entities are privately owned and operated, but they are regulated and controlled by the government. Thus, when the ObamaCare shit hits the fan, the government can blame the clinicians, hospitals, pharmaceutical companies, etc. for cost overruns, drug and medical supply shortages, long waiting periods for care, etc. If this is done effectively, the government can successfully enact what it really wants: the complete takeover of the health care sector (moving from fascism to socialism).

  • anon1

    There is no way in hell the Federal exchanges are going to be ready on time. They are supposed to be open for business in October, three short months from now.

    However, the final contract for eligibility verification (i.e. staffing the Federal exchange to process applications and offer customer service) was finally issued last monday. http://tinyurl.com/ky57y3b

    That is one hell of a sprint to get the exchanges up and running!

  • Nehemiah

    There are things Congress can do to fix this, but I say let the whole bucket of crappola hit the fan. Those who read this blog regularly have known from the beginning that this would be FUBR. I for one am willing to take the hit to see the look on the faces of the Obama Zombie's when, after having their hours cut to under 30, have to buy insurance or pay a penalty. "I gotta do what?" "I thought it was free"? "I thought Romney was paying for it?"

    "Priceless"

  • marque2

    It is interesting that it should also make the unemployment go down at least temporarily as businesses divvy up full time jobs. It is the French method of full employment.

  • marque2

    But then the government will just come up with a new plan to save us from the last plan. Like student loans. The mandated rates so low the private sector bailed out - and then took over the entire program claiming that would save 100 billion over ten years. So far it has cost 260 billion more - and students are still complaining and now interest rates have become a political football to gain votes.

    I don't think it is excellent for it to fall apart necessarily for fear of the fix.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    How dare you try to run your business in a profitable manner, Warren?

    Didn't you get the (Detroit UAW/Obama MITI) memo that businesses exist to provide health insurance and retirement benefits, not to run profits and maximize efficiency?

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Exactly. The remedy to a shit piece of legislation may be worse than the original piece of shit.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    My thoughts exactly, and excellent (and correct) use of fascism and socialism.

    The Obama Admin (and modern leftists) are foundationally socialist, but employ fascism regularly in their drive for control.

    Mussolini is smiling.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    PS, I don’t know about the individual mandate going down (temporarily).

    That is the centerpiece of the legislation, and it would look really, really suspicious if it was delayed. They will probably do the half-assed guaranteed shit storm version, and the exchanges will implode quickly - which is their goal anyway.

    Remember, the end state/game of Obamascare is not Obamascare: it’s single payer. This is only an interim step, and when it flops/implodes/never gets off the ground, that’s the signal for single payer.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Flaw in that thinking: Obama zombies (think LarryG, et al.) lack all critical thinking skills, and so would never arrive at the point where they would notice Romney isn’t paying for it.

  • http://devilish-details.blogspot.com/ mesaeconoguy

    Here’s the breakout:

    http://www.zerohedge.com/news/2013-07-05/obamacare-strikes-part-time-jobs-surge-all-time-high-full-time-jobs-plunge-240000

    http://www.zerohedge.com/news/2013-07-05/where-low-paying-jobs-were-june

    Notable:

    -70% of all job additions, or 135K of 195K, in June were for the lowest paying jobs.

    -part-time jobs soared by 360,000 to 28,059,000 - an all time record high. Full time jobs? Down 240,000

    -So far in 2013, just 130K Full-Time Jobs have been added, offset by a whopping 557K Part-Time jobs

  • DaveK

    Yes, this is really becoming a disaster. My insurance company has just informed me that they will be offering a bunch of new plans that will roll out on October 1. These are all plans that are in compliance with PPACA, and that existing customers will have the "opportunity" to choose one of these new plans. No official word about the premiums, but from other sources, it looks like the least expensive new policy will about double what I pay now. In other words, that policy I liked and could afford won't be available to me any longer.

    If the mandates slip, the health insurance companies won't have the customer base needed for them to survive. If the mandates are kept, business and individuals will be living an expensive and complicated bureaucratic nightmare.

    My prediction at this point... The mandates will be slipped past the midterm elections. In the meantime, the health insurance industry will simply collapse. Congress will then enact universal healthcare, and low-information voters will be extatic that they've been saved by their great and wonderful government.

  • JW

    I know this last statement has earned me a fair share of crap in the comments section as a heartless capitalist swine, but the vitriol is just absurd.

    Screw these cheesedicks. These must be the guys who *never* do anything to reduce their own tax burden and pay the sales tax on online purchases voluntarily, right? RIGHT?

    If you have vitriol to spew, you know where to direct it, and it's not at business owners who are at the mercy of the State. Actually, if you're part of the problem and not the solution, voting over and over for the status-quo, spew it at your mirror.

  • LarryGross

    People who work at more than one job, perhaps two part time jobs and neither offers health insurance - those folks will get the opportunity to obtain health insurance - independent of the business they work for and that, in turn, will give them significantly better job mobility - to take another job - whether it has health insurance or not - perhaps better hours, better pay or a better employer, who knows - but they no longer will be concerned about the employer for their health insurance.

    I think this is the real reason why businesses - businesses who currently do not offer health insurance, like under 50 employees or even more than - really fear ObamaCare.

    It's going to change the game and empower people who can only find lower-paid or part-time work. It will also encourage individual entrepreneurship because no longer will they HAVE to TRY to find a job that offers health insurance and/or go "bare" and use the ER.

    We're in a global competition for jobs and we're competing against places like Singapore that has implemented a system like ObamaCare except it also forces price disclosure for providers. But everyone pays into the system and everyone gets some level of insurance and as a result, they are free to pursue whatever job opportunities that "work" for them.

  • mlhouse

    Seriously?????? THey always could. Any individual can get a health insurance policy. And, in most cases, those health policies are much cheaper than group policies.

  • Brad Warbiany

    I've long believed that the low cost of the penalties in the employer mandate were a stalking horse to break the employment/insurance link. For many companies, tossing their employees onto the exchanges and just paying the penalty will be a lot cheaper than actually insuring their employee, and many of those employees will qualify for subsidies anyway.

    In 5 years, do you really believe anyone other than union members will have healthcare as part of their employment?