Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
July 03--All that stuff about an employer mandate to provide healthcare insurance to employees, or face fines of $2,000 per worker -- this for all firms with 50 or more full-time employees? Never mind, at least for another year.
The Obama Administration yesterday pulled the plug on one of the most major mandates of the 2010 Affordable Care Act that was set to go into effect Jan. 1, 2014: The employer mandate.
Officially, it is being termed a one-year delay -- or reprieve, whichever you prefer. But some critics of the healthcare law are already seizing upon this as the first cracks in a complicated, confusing re-organization of some 17 percent of the U.S. economy.
Rob Glus is a consulting actuary and chair of Conrad Siegel in Harrisburg. The firm advises firms of 100 employees and larger all across Pennsylvania on their health care and benefit plans. And Glus has spent the better part of a year helping businesses and organizations brace for the changes under Obamacare.
He calls the employer-mandate delay a significant development in the Obamacare roll-out. But it is far from the health care law's death knell.
"It think there was a little bit of a blink," Glus says of the sudden employer-mandate delay, announced on a lower-level official's blog just before the Fourth of July.
"It's a realization that what they are doing is very complex," Glus adds. "There is a lot of administration built around making it work. So there is some blinking there. I wouldn't go as far as saying it is unworkable. They are saying 'it is going to be workable; we just don't want it to be rushed'."
And make no mistake, those most relieved by the one-year delay are businesses, themselves.
"We are not surprised by the delay and think it is a wise move," cheers David Black, President and CEO of the Harrisburg Regional Chamber and CREDC. "It's a sign that the Obama administration is beginning to understand the huge bureaucracy they have created in law, and the difficulty of creating the support system to administer this law. "
Glus has been working with many firms over the complicated headache of controlling hours of part-time employs. This, so the part-timers don't breech the 30-hour per week threshold when Obamacare's employer insurance rules would kick in.
This dilemma faced every large employer from supermarkets to school districts, Glus said. And controlling those part-time employee hours for grocery baggers and substitute teachers would require each employer to implement infrastructure, tracking and controls to keep a lid on their employees' hours and thus, their insurance costs.
"No 1., it is a good thing for everyone," Glus says, including the Obama Administration among the winners in the one-year delay. "Some employers just aren't ready for it. Changing the way they hire, their staffing practices, all the tracking and reporting to determine whether employees are eligible -- this affords the opportunity to more slowly to change your business practices to comply with the law."
Even those firms that were ahead of the curve and ready to go, will benefit from a dry run, Glus adds.
"Even if you have implemented new procedures and administration to comply, this affords you the opportunity to test those things before it goes into effect," he points out.
Of course, some firms were simply slashing part-time hours across the board in response to the looming law. Most famously, Darden Restaurants, parent of Red Lobster and Olive Garden, announced that it was scaling back employee hours to avoid Obamacare's mandates.
"Some people were saying to comply with this, we just have to cut people back below 30 hours," Glus says. "That is not good for employees. And it's not good for employers. People were making some quick decision on their staffing. Doing it slower is always better."
In short, the health care law's many uncertainties added up to unintended consequences that some business groups claimed would damage the economy and thwart the fragile recovery. Firms on the 50-employee threshold wouldn't hire, and those over it would slash employee hours to push more workers under the part-time 30-hour limit. All of it added up to bad economic policy, some said.
Black ascribes all this to the gaping difference between a worthy goal and truly effective policy.
"This is actually a good case study in translating a basically good policy idea -- health care accessibility and affordability for all -- into law," he says. "It is simply not that easy regardless how you feel about the policy."
And now that Obamacare has blinked, Black and others believe more changes, concessions and delays might follow. All this would be good, Black says, if it leads to a better health care law in the end.
"We suspect other aspects will be slowed or removed over time and would strongly support opening the legislation to make the law more realistic for everyone impacted by the legislation -- from the currently uninsured, to health care providers, to businesses providing benefits to their employees, to people who provide their own health care coverage and to health care insurers," Black says.
But Glus warns that critics hoping to drive a stake into Obamacare's heart should not to read too much into the one-year delay of the employer mandate. Indeed, pushing the implementation to 2015 could make the law even stronger, avoiding both a rushed and bumpy implementation come January and a possible political backlash at the polls come November, 2014.
"Bad implementation would be much more problematic than a delayed implementation," Glus notes. "If it was truly kicked-off on a negative note, it would be extremely problematic from a political perspective. Delaying it is the lesser of two evils. The alternative was rushing it through and having a lot of negative reaction."
Still, Glus will be watching for anymore last-minute delays or changes in Obamacare's roll-out. This could signal real trouble. But for now, the benefits expert just doesn't see it.
"I don't see anything that is going to change the guts of it," Glus says, noting that the individual mandate to purchase healthcare insurance remains intact for 2014, and so does the planned roll-out of the state-by-state insurance exchanges.
"It is just a delay in the implementation," Glus says. "It's the logistics. It was very complicated. Give them credit. I don't think you want to implement it in a rushed or bad way. You have to think through all the logistics, all the unintended consequences."
Now, both business and the Obama Administration have another year in which to do just that.
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