Obamacare Delays May Create Election Bomb for Democrats

Insurance cancellations and the employer mandate will both hit just before the 2014 midterms.

Mario Ricart and Rudy Figueroa insurance agents with Sunshine Life and Health Advisors help people with information about policies that are available to them under the Affordable Care Act at a kiosk setup at the Mall of Americas on November 5, 2013 in Miami, Florida.
National Journal
Sam Baker
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Sam Baker
Nov. 20, 2013, 5:03 p.m.

Some of Obama­care’s most dam­aging polit­ic­al nar­rat­ives will be get­ting a fresh look right be­fore next year’s midterms, thanks to delays in the law’s im­ple­ment­a­tion.

Can­celed in­sur­ance plans are the most ob­vi­ous ex­ample. Pres­id­ent Obama said last week that in­surers can un-can­cel cer­tain policies for an­oth­er year, a move largely de­signed to ap­pease nervous Demo­crats. But a one-year delay simply means that can­cel­la­tion no­tices will re­sume next Oc­to­ber — just weeks be­fore many of those same Demo­crats will face voters for the first time since vot­ing to pass the Af­ford­able Care Act.

And that’s not the only polit­ic­al threat lurk­ing just ahead of the 2014 midterms. The White House also delayed the law’s em­ploy­er man­date un­til 2015. That means em­ploy­ers will be de­cid­ing in mid- to late 2014 wheth­er they’re go­ing to of­fer health be­ne­fits un­der the man­date — and wheth­er to cut em­ploy­ees’ hours to avoid provid­ing them with health care.

“They’re con­cen­trat­ing everything in the fall of next year, and that’s a very dan­ger­ous time to be do­ing it,” said Douglas Holtz-Eakin, a con­ser­vat­ive eco­nom­ist who leads the Amer­ic­an Ac­tion For­um.

The fact that mil­lions of in­di­vidu­al in­sur­ance policies were can­celed this year was not a side ef­fect of the Af­ford­able Care Act; rather, it was one of the trade-offs re­quired to make the law’s cov­er­age guar­an­tees work.

Those trade-offs can be polit­ic­ally dif­fi­cult, but pro­long­ing the is­sue un­til next year “just ex­tends the pain for them,” Holtz-Eakin said. He was sur­prised that the ad­min­is­tra­tion and con­gres­sion­al Demo­crats didn’t simply bite the bul­let now — a year be­fore the midterms. He called it the “rip-the-Band-Aid ap­proach.”

“This is one where, in­ex­plic­ably, the wheels came off. They usu­ally think through the polit­ics of these things pretty clearly,” Holtz-Eakin said.

Still, al­though plans will have to be can­celed again next Oc­to­ber, there are reas­ons to be­lieve the is­sue won’t be as dam­aging as it has been over the past two months. For starters, it’s not clear how many plans will ac­tu­ally be ex­ten­ded for an­oth­er year. Sev­er­al states have re­jec­ted Obama’s pro­pos­al, and in­surers aren’t sure wheth­er it’s worth the trouble to re­sur­rect policies they have already can­celed.

Con­sumers whose plans are can­celed next year will also have a much easi­er time find­ing a re­place­ment. Be­cause Health­Care.gov, the primary Obama­care en­roll­ment web­site, was func­tion­ing so poorly this year, con­sumers were see­ing their plans can­celed yet had no easy way to even find out wheth­er they could get tax sub­sidies to help buy a new policy.

Jim Man­ley, a Demo­crat­ic strategist and a former com­mu­nic­a­tions ad­viser to Sen­ate Ma­jor­ity Lead­er Harry Re­id, D-Nev., said Demo­crats’ anxi­ety over plan can­cel­la­tions will sub­side if the ad­min­is­tra­tion meets its goal for fix­ing Health­Care.gov by the end of this month.

The im­pact of the em­ploy­er man­date is less clear. Tracy Watts, who leads the na­tion­al health re­form team at the Mer­cer con­sult­ing firm, said em­ploy­ers gen­er­ally firm up their health care plans by Labor Day, with some smal­ler firms wait­ing un­til Oc­to­ber.

The biggest ef­fect of the em­ploy­er man­date, she said, will be on the roughly one-third of em­ploy­ers af­fected by the law’s defin­i­tion of a full-time em­ploy­ee. Busi­nesses must provide cov­er­age to every­one who works at least 30 hours per week (not 40), a threshold most em­ploy­ers aren’t used to.

Re­pub­lic­ans have already seized on an­ec­dot­al re­ports of busi­nesses cap­ping work­ers at 29 hours per week to avoid provid­ing health care be­ne­fits. Mer­cer’s re­search sug­gests that’s not a com­mon prac­tice — only about 10 per­cent of em­ploy­ers say they’re con­sid­er­ing cap­ping work­ers’ hours in­stead of provid­ing health be­ne­fits, ac­cord­ing to the firm’s sur­veys.

“Most of them are plan­ning to ex­tend be­ne­fits to that seg­ment of their work­force,” Watts said.

But Re­pub­lic­ans surely will still at­tack Demo­crats over an­ec­dot­al re­ports of people hav­ing their hours cut. Some of the highest-pro­file an­ec­dotes be­fore the man­date was delayed came from par­tis­an busi­ness own­ers who threatened to cut work­ers’ hours for polit­ic­al pur­poses, like the Flor­ida res­taur­ant own­er who said he would cut work­ers’ hours and add an “Obama­care sur­charge” to his cus­tom­ers’ bills.

Moreover, the U.S. Cham­ber of Com­merce is ex­pect­ing deep­er cuts than Mer­cer. The cham­ber’s sur­veys found that more than 20 per­cent of fran­chise own­ers said they have already re­placed full-time work­ers with part-timers to avoid the cov­er­age man­date.

Man­ley said he’s not wor­ried about the em­ploy­er man­date’s tim­ing. The vast ma­jor­ity of em­ploy­ers already provide health in­sur­ance, he noted, and mod­estly ex­tend­ing those be­ne­fits isn’t a ma­jor change to the health care sys­tem.

“The Re­pub­lic­ans are go­ing to seize on everything they can, but I’m not so sure I see the em­ploy­er man­date as a prob­lem,” Man­ley said “It’s not a dra­mat­ic policy change. It’s something folks are com­fort­able with.”

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