There are both glass-half-empty and glass-half-full ways to react to the Obama administration's delay of the employer mandate for healthcare coverage until 2015.

The announcement doesn't mean that ObamaCare is going away, or that scores of employers will dump their employees into the exchanges next year. After all, most large employers already provide health insurance for their employees, and good benefit packages are still a way to attract and retain talent.
The delay is, however, an acknowledgement on the part of the Obama administration that adding millions of people to the insured rolls is a huge undertaking with many moving parts, and not everything is going to be ready come Jan. 1, 2014.

The administration was careful to release the announcement right before July 4, no doubt hoping the holiday weekend would minimize the attention paid to doomsayers and critics. Now that the fireworks are spent and the barbecues are over, here's how we size up the implications.

Employers: If you pressed any CEO for her honest opinion on providing healthcare benefits to employees, she would tell you that she would like nothing more than to be out of the health insurance business. Providing health insurance eats up management time and cuts into wages that could otherwise be used to reward talent and incent innovation. New York Times columnist Ross Douthat pointed out on Sunday that critics on both the right and left believe our system of employer-provided health benefits is unsustainable. Employers are not going to wholesale drop benefits any time soon, even when the mandate for those with more than 50 employees is enacted in 2015. (And almost 96 percent of those with 50 or more employees provide insurance, according to the Agency for Healthcare Research and Quality.) But don't be surprised if they are quietly lobbying for an eventual change in how Americans get their benefits perhaps one like the German system, in which workers choose a sickness fund (insurance risk pool) operated separately from employers.

States: Nothing much is changing here: The states that have embraced healthcare reform, including California and Maryland, will have their exchanges up and running and will experience a brisk uptake from the uninsured. The states opposed to healthcare reform, including many who have defaulted to the federal government to run their exchanges, will have more sluggish uptake. They may even lose some low-income residents who migrate to states where Medicaid is expanding (and if you want to know how painful and complicated that can be, read up on the history of Tennessee's ill-fated Medicaid expansion of the 1990s).

Health plans: The bulk of enrollment coming through the new exchanges about 7 million in the first year  will be in the individual market, and that part of healthcare reform is not changing in 2014. There is a minimal penalty for not getting insurance ($95 or 1 percent of income) that first year, so many young people will opt out. This will hurt the risk pool, but health plans have known about this all along and presumably have been pricing premiums to absorb increased utilization. Interestingly, however, a few Blue Cross Blue Shield plans which are better positioned to serve the small-group and individual market than most insurers are taking a wait-and-see attitude. See HLI Analyst Bill Melville's blog for details.

Obama administration: The delay is an acknowledgement on the part of the administration that it was not going to be easy for employers to meet reporting requirements on their number of full-time employees and benefit programs in order to comply with the mandate. But that does not mean the exchanges won't be up and running. They will be. If anything, the delay will win a few points for Obama in the business community. By putting off the requirement, he acknowledged that it could cause employers to delay hiring (and is likely already doing so). This gives businesses some breathing room, and less fodder for criticizing the administration.

Pharma: Low-wage workers in businesses not currently providing insurance, including restaurants and retail stores, will opt for the individual exchanges with subsidized benefits. This likely tilts the risk pool of these exchanges more toward those with pre-existing conditions, meaning increased use of drugs for high blood pressure, diabetes, and other diseases. For pharma, this actually opens up opportunities for partnering with health plans that are being forced to spend more of the healthcare premium on medical costs, especially as the industry tries to blunt the impact of increased generic utilization.

In short, the delay in the employer mandate does not doom ObamaCare or mean that employers are gleefully eliminating their benefits managers. But it does make for an even more nuanced dialog about what happens in 2015 and beyond.

Follow Sheri Sellmeyer on Twitter @SheriSellmeyerLI

DRG becomes Clarivate

View Now