Does the Delay of the Employer Mandate Show That PPACA Will Fail?

The announcement that the Internal Revenue Service would not enforce the reporting requirements of the “employer mandate” of the Patient Protection and Affordable Care Act  (P.L. 111-148) and the Health Care and Education Reconciliation Act (P.L. 111-152) (together, PPACA), has prompted opponents of the law to argue that the mandate is unworkable and that PPACA is doomed to failure. Opponents of the law have argued that President Obama has violated the constitution by refusing to implement the law.

The implementation of PPACA  has met with continuous resistance since its enactment. The constitutional litigation challenging the Medicaid expansion and the individual mandate diverted attention and energy from the preparation for 2014. The Supreme Court’s ruling in National Federation of Independent Businesses v Sebelius upheld the individual mandate, but the ruling that states could not be compelled to expand Medicaid opened up new opportunities for resistance. Most of the states with governors and legislatures opposed to PPACA chose not to participate either in the Medicaid expansion or in running the health insurance marketplaces.

Without the Medicaid expansion, the individuals least able to buy insurance are left without coverage.  And as we’ve discussed before, some of the states whose opposition was most vehement also have populations with more uninsured, low-income residents.  The result is that many of the people who would have benefited from PPACA will be left out.

Resistance to the preventive services mandate also has engendered plenty of litigation. The original rule exempting religious organizations was identical to the contraceptive coverage laws of several states. The highest courts of California and New York had upheld the requirement without any damage to religious freedom. But lawsuits challenging the rule were brought  all over the country both by religious organizations that would have been exempt and by secular commercial entities that would not normally be exempted from laws regulating employee benefits. The safe harbor delayed enforcement of the requirement for a year while the administration tried to find common ground with religious organizations. No one argued then that the administration failed to carry out its constitutional duties.

What does the delay of the employer mandate mean for the future of the health reform law? The requirement to provide affordable insurance remains. Without enforcement of the reporting requirements applicable to employers and insurers, the government will have difficulty with any attempt to enforce the coverage requirement. It is reasonable to expect that no enforcement of the individual mandate will be attempted before the reporting requirements are enforced. In that way, the delay is similar to the safe harbor for the preventive services mandate. Employers know they will need to comply, but they have additional time to work out the technical difficulties.

The opponents of the law have taken this opportunity to argue that the individual mandate also should be delayed.  As a practical matter, if the government does not know which employers are (or are not) providing access to affordable insurance coverage, enforcement of the individual mandate would probably not be an effective use of staff time. It also is possible that the administration will decide to delay enforcement of the individual mandate because of the likely public reaction to the enforcement of shared responsibility only against individuals, but not employers.

A one-year delay will not prove that PPACA is unworkable, only that we have not yet tried to see whether it will work.