WASHINGTON — In a significant setback for President Barack Obama's signature domestic initiative, the administration on Tuesday abruptly announced a one-year delay, until 2015, in his health care law's mandate that larger employers provide coverage for their workers or pay penalties. The decision postpones the effective date beyond next year's midterm elections.
Employer groups welcomed the news of the concession, which followed complaints from businesses and was posted late in the day on the White House and Treasury websites while the president was flying home from Africa. Republicans' gleeful reactions made clear that they would not cease to make repeal of Obamacare a campaign issue for the third straight election cycle.
While the postponement technically does not affect other central provisions of the law — in particular those establishing health-insurance marketplaces in the states, known as exchanges, where uninsured Americans can shop for policies — it throws into disarray the administration's effort to put those provisions into effect by Jan. 1.
"I am utterly astounded," said Sara Rosenbaum, a professor of health law and policy at George Washington University and an advocate of the law. "It boggles the mind. This step could significantly reduce the number of uninsured people who will gain coverage in 2014."
Under the law, most Americans will be required to have insurance in January 2014, or they will be subject to tax penalties. The announcement Tuesday did not say anything about delaying that requirement or those penalties.
Administration officials sought to put the action in a positive light in the online announcements, and they emphasized that the existing insurance coverage of most Americans would not be affected.
"We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively," Mark J. Mazur, an assistant Treasury secretary, wrote on the department's website. "We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so."
The 2010 Affordable Care Act required employers with more than 50 full-time workers to offer them affordable health insurance starting next year or face fines. Some companies with payrolls just above that threshold said they would cut jobs or switch some full-time workers to part-time employment so they could avoid providing coverage.
Under the provisions to set up state-based marketplaces for coverage for uninsured Americans, subsidies are supposed to be available for lower- and middle-income people who qualify and are not insured through their employers.
By delaying the mandate for businesses and its reporting requirements, the government may be unable to confirm before 2015 whether employers are offering insurance to their employees, making it difficult for the exchanges to know who is entitled to subsidies to help pay for policies.
Enrollment in the exchanges is to begin Oct. 1, with insurance coverage taking effect Jan. 1. Yet even some supporters of the law dispute that the establishment of the health insurance exchanges is on schedule, especially because progress varies by state. Some Republican-led states are resisting the health care law and withholding resources for putting it into effect.
Employer groups were quick to applaud the delay. At the U.S. Chamber of Commerce, which has strongly opposed the law, Randy Johnson, senior vice president of labor, immigration and employee benefits, said in a statement, "The administration has finally recognized the obvious — employers need more time and clarification of the rules of the road before implementing the employer mandate."
E. Neil Trautwein, a vice president of the National Retail Federation, said the delay "will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment." James A. Klein, president of the American Benefits Council, a lobby group for large employers, welcomed the "breathing room."
Democrats were all but silent on the news, but a spokesman for Sen. Harry Reid of Nevada, the majority leader, released a statement late Tuesday. "Both the administration and Senate Democrats have shown — and continue to show — a willingness to be flexible and work with all interested parties to make sure that implementation of the Affordable Care Act is as beneficial as possible to all involved," the spokesman, Adam Jentleson, said. "It is better to do this right than fast."
But Republicans immediately reacted with statements claiming vindication for their efforts to repeal the law altogether.
Sen. John Barrasso, R-Wyo., called the administration action "a cynical political ploy to delay the coming train wreck associated with Obamacare until after the 2014 elections."
Sen. Mitch McConnell, the Senate Republican leader who faces re-election next year in Kentucky, said in a statement, "The fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."