Delay of Obamacare Mandate Will Cost Taxpayers $12B

President Barack Obama's decision to delay implementation of part of his healthcare reform law will cost $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.

The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced July 2 of the employer mandate — a requirement for larger businesses to provide health coverage for their workers or pay a penalty.

The analysts said the delay will add to the cost of "Obamacare's" insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.

"Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014)," CBO said in a July 30 letter to Representative Paul Ryan, Republican chairman of the House of Representatives Budget Committee.

Under Obama's healthcare reform law, employers with 50 or more full-time workers were supposed to provide healthcare coverage or incur penalties beginning Jan. 1. But the requirement will now begin in 2015.

The delay intensified doubts about the administration's ability to implement Obama's signature domestic policy achievement and stirred Republican calls for a similar delay in another Obamacare mandate that requires most individuals to have health insurance in 2014.

The Republican-controlled House followed up the administration's decision by voting on July 17 for its own measures to delay the employer and individual mandates. Neither piece of legislation is expected to succeed in the Democratic-controlled Senate.

State and federal officials are racing to set up new online health insurance exchanges, where lower-to-moderate income families that lack health insurance will be able to sign up for federally subsidized coverage beginning on Oct. 1. The poor will also be able to sign up for Medicaid coverage in 23 states that have opted to expand the program.

Most large employers already offer health insurance and CBO said few are expected to drop coverage because of the delay.

But the change will still result in a $10 billion reduction in penalty payments that some employers would have made in 2015 for failing to provide coverage next year, CBO said.

The change also means another $3 billion in added costs for exchange subsidies. That is because about half of the 1 million workers who would have gained employer-sponsored coverage next year will now obtain insurance through the exchanges or via public programs including Medicaid, CBO said.

Other changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will offset those factors by about $1 billion.

CBO now puts the net cost of Obamacare's insurance coverage provisions at around $1.38 trillion over the next 10 years, vs. its May baseline projection of $1.36 trillion.