Employer mandate delay cost Government billions

Employer mandate delay cost goverment billions

CBO Director Douglass Elmendorf

 

On July 2, 2013, the Obama Administration announced a decision to delay for one year the penalties for employers employing more than 50 full time employees that do not provide affordable coverage; additionally the administration announced a delay for the reporting requirements for insurers and employers.Employer mandate delay cost government billions.

Today the Congressional Budget Office (CBO) provided an analysis on what it will cost the federal government for the period of time when the fines will not be collected from companies that would have been required to provide affordable health coverage to their employees. According to a report addressed to Paul Ryan Chairman on the Committee on the Budget from Douglas W. Elmendorf  Director of the CBO the resulting impact will be $10 Billion dollar loss resulting in a $12 Billion net increase to the Patient Protection and Affordable Care Act (PPACA). While many have praised the administration for delay the employer mandate delay there is a definitely a financial impact to the bill this report shows.

Here is how this information was calculated by the CBO

On a May 2013 the CBO provided its baseline projections of the financial costs of PPACA to the federal government. The amount was estimated to be $1,363 billion over a 10-year period from 2014 to 2023. Based on the Employer Mandate Delay announced on July 2, 2013 it is assumed penalties on employers and certain reporting requirements will not be enforced in 2014. As a result of the Administration’s delay on the employer mandate the net cost of the PPACA is now estimated at $1,375 billion—$12 billion more than previously estimated.

What caused this increase? The change is due to a $10 billion reduction in penalty payments by employers that was expected in 2015 but will no longer be collected (Penalties assessed for 2014 would have been collected in 2015.)  Due to the Employer mandate delay.

Costs for exchange subsidies are expected to increase by $3 billion. Other small changes, including an increase in taxable compensation resulting from fewer people enrolling in employment-based coverage, will offset those increases by about $1 billion, resulting in a net impact of $12 billion dollars to the program.

Additionally the CBO estimates that there will be other budgetary effects other than the loss of revenues from the penalty payments. Such factors stem from how many people will obtain insurance coverage and from what source. CBO and JCT expect some large employers that would have offered health insurance coverage to their employees in 2014 will no longer do so as a result of the one-year delay of penalties for those that do not offer affordable coverage. However, most large employers currently offer health insurance coverage to their employees, and because the delay is only for one year, CBO and JCT expect that few employers will change their decisions about offering such coverage.

Under the PPACA, large employers employing 50 or more full time employees, that fails to offer health insurance coverage that meets the affordability standard defined under the PPACA will be liable for a fee to be administered by the IRS starting in 2016 for the 2015 fiscal year. Additionally, insurers and health coverage providers will be required to report the names of those receiving coverage, and certain group of larger companies will be mandated to report on the health insurance coverage offered to their full-time employees.

 

Print Friendly

Fatal error: Uncaught Exception: 12: REST API is deprecated for versions v2.1 and higher (12) thrown in /home/lapeti6/public_html/iHealthcareupdates.com/wp-content/plugins/seo-facebook-comments/facebook/base_facebook.php on line 1273