Healthcare Law Penalty Delayed, Could Cost Government Up To $10B
After complaints from businesses that tax and insurance requirements for the new healthcare law would be too complicated to implement by January 2014, the Obama administration delayed a requirement of the Affordable Care Act (ACA) until 2015. The delay will cost the government $10 billion, according to a new report released by the Congressional Budget Office.
Earlier in July, the White House chose to delay the law that would require employers with over 50 employees to offer affordable coverage to all employees, or face up to $3,000 in fines per employee. The law, which was originally meant to go into effect next year along with the rest of the ACA's requirements, will be put off until 2015.
In addition to the penalty fees, the law would include reporting requirements where health coverage providers, such as self-insuring employers, would have to report the names of people receiving coverage.
The CBO report stated that the Affordable Care Act was originally estimated to cost the government $1,363 billion over the course of ten years, from 2014 to 2023. "As a result of the Administration's announcement and recently issued final rules, the net cost is now estimated to be $1,375 billion — $12 billion more than previously estimated," the report says. $10 billion of that would have been essentuially revenue earned from penalty payments.
Some labor unions have decried the delay as a hand-out to bigger businesses. While employers are relieved that the delay buys them more time, however, they are still wary of the long-term effects of the new law.
"There's still so much that's unknown in many areas," Joe DeMontigny, Chief Financial Officer of Peachtree Hotel Group LLC, told The Wall Street Journal. "I think a delay certainly helps, but we still perceive that this is going to be punitive to our business."
The Affordable Care Act takes effect January 1, 2014.