Crumble: The Disastrous Obamacare Delay

Katie covered the breaking news last evening -- a classic bad news dump on the front end of a long holiday weekend.  The administration is out of luck if it hopes their major announcement will disappear amidst hot dogs and parades; we'll be talking about this move for the next year-and-a-half:

The Obama administration will delay a crucial provision of its signature health-care law, giving businesses an extra year to comply with a requirement that they provide their workers with insurance. The government will postpone enforcement of the so-called employer mandate until 2015, after the congressional elections, the administration said yesterday. Under the provision, companies with 50 or more workers face a fine of as much as $3,000 per employee if they don’t offer affordable insurance. It’s the latest setback for a health-care lawthat has met resistance from Republicans, who have sought to make theplan a symbol of government overreach. Republican-controlled legislatures and governors in several states have refused funding to expand Medicaid coverage for the poor and declined to set up exchanges where individuals can buy insurance, leaving the job to the federal government. The delay in the employer mandate addresses complaints from business groups to President Barack Obama’s administration about the burden of the law’s reporting requirements. 

If the White House had listened to business owners before passing this law, they wouldn't be mopping up their own mess today because Obamacare wouldn't exist.  This development also marks the death of Democrats' bogus "Republican obstructionism" excuse-making.  (It was always bogus because (a) the exclusively Democrat-written and -passed law allowed states to opt out of setting up exchanges, and (b) the mandatory Medicaid expansion element was struck down by seven Supreme Court justices).  Now we have the Obama administration delaying a (second) major component of its own law due to a combination of incompetence, admitted economic harm and political considerations.  Swing and a drive...

So what happens next?  Read Mary Katharine Ham's list of questions is a good place to start, as is Avik Roy's analysis of the immediate implications.  A few additional thoughts:

(1) The administration is admitting that the employer mandate will have a detrimental effect on the economy and on hiring.  How does adding another year of gray-area and uncertainty rectify those problems, even if the reporting requirements are tightened up a bit?  Forty-one percent of business owners polled by Gallup said they're in hiring freeze mode, and nearly 20 percent have actually jobs.  Another year of this status-quo morass helps how, exactly?

(2) If large businesses are getting an on-the-fly waiver, why shouldn't every single citizen get extended relief from the individual mandate tax?  This is the law's least popular element, so Republicans should flog this point.

(3) Speaking of on-the-fly decisions, the law's language clearly sets an implementation date for the employer mandate, which the president is simply ignoring.  Do presidents now have the power to ignore, delay, waive, or suspend significant portions of democratically-enacted laws, at least in part to address of rank political concerns? 

(4) A lot of conservatives are arguing that this is little more than a naked attempt to shuffle the consequences of Obamacare beyond yet another election.  If this is a major part of the administration's calculus, I'm not sure if it'll add up the way they hope.  While the delay may alleviate some potential snags on the jobs front, it will likely incentivize many mandate-free businesses to dump employees into the government exchanges.  This will place significant logistical and financial strains on the exchanges, which are also behind schedule in many states.  Yuval Levinsketches out another glaring exchange-related problem:

Under the law, eligibility for exchange subsidies depends on an individual not receiving an affordable offer of qualified insurance from an employer. If employers will now not be required to report on their insurance offerings in 2014, I don’t see how the government will be able to determine eligibility for subsidies, and therefore how the exchanges will be able to function. Making subsidies available without proof of eligibility would be very expensive and destabilizing to the insurance system, and would also require the retraction of such subsidies if the employer mandate ever does return. Coming up with other ways to prove eligibility would be very difficult at this late stage (as exchanges are supposed to start operating in three months), and would also be totally lawless...

So millions of Americans will be shoved into a nascent, unstable exchange system, which very well may not be operational in time -- with no reasonable method of determining subsidy eligibility for many of them.  And subsidies will matter more than ever, considering the epidemic of Obamacare premium shocks sweeping the country.  I'm unclear on how this scenario will be particularly beneficial to Democrats in 2014.  Republicans have also been handed an extra year to relentlessly point out how the law is unsustainable, messy, unaffordable, and bad for Americans.  They'll call for additional delays and repeal.  They'll hammer Obamacare throughout 2014, with spillover into at least 2015.  In short, the administration is guaranteeing that the dysfunction of Obamacare will remain a viable and relevant political issue for the GOP for years to come.  Democrats'push-back on this has been beyond feeble.  They have no good arguments.  

The White House is mired in a competency crisis, and the president's approval rating continues to suffer.  The administration's problems are snowballing; Obamacare's weak numbers will very likely deteriorate even further.  I'll leave you with CBS News analyzing the announcement this morning.  Not much sugarcoating here:

UPDATE:

I sure do.  Good plan.

http://townhall.com/tipsheet/guybenson/2013/07/03/crumble-the-disastrous-obamacare-delay-n1633396