Alexandra Blumer; Rachel V. Thakore, BS; A. Alex Jahangir, MD; Hassan R. Mir, MD; and Manish K. Sethi, MD
The Patient Protection and Affordable Care Act (ACA), signed into law in 2010, will change the U.S. healthcare system more than any other legislation since the Social Security amendments that created Medicare and Medicaid in 1965. The ACA promises all Americans access to affordable medical coverage. Although several aspects of this law have already been implemented, many more changes are still to come.
In 2014, some of the most significant provisions of the ACA—including the employer insurance mandate, the individual mandate, and the implementation of state-based health exchanges—are planned to take effect. However, on July 2, 2013, the Obama administration announced some delays in the implementation of several provisions under the ACA. This article will investigate the ramifications of these delays on the American healthcare system and discuss their impact on orthopaedic surgeons.
What will be delayed?
The July 2 announcement included notice of a 1-year transition relief period for the mandatory insurer and employer reporting requirement provisions of the ACA. This affects the following requirements of the ACA:
- Insurers and self-insuring employers are to file a return with the Internal Revenue Service (IRS) regarding the minimum essential coverage.
- Employers with 50 or more full-time employees are required to file a return with the IRS regarding the coverage provided to employees.
- Employers with 50 or more full-time employees that don’t offer required coverage will be required to pay penalties of $2,000 annually per full-time employee.
In the announcement, Mark J. Mazur, an assistant Treasury secretary, addressed concerns from businesses about the employer and insurer reporting requirements under the ACA. To ease the transition, the administration will spend 2014 working with employers, insurers, and other reporting entities to encourage voluntary implementation of these provisions in preparation for full implementation in 2015.
Due to the delays in the start of information reporting, it will be impractical to determine which employers owe shared responsibility payments. As a result, these penalties will not apply until 2015.
What the delay means for employers
Many employers were pleased with the delay. Because the rules governing information reporting and coverage provision are quite complicated, employers requested more time and further clarification before the penalty payments were implemented. Treasury officials have said that formal rules will be released this summer to clarify what is expected of insurers, employers, and other parties required to provide coverage.
Although the penalties will not be in place until 2015, the administration is encouraging employers to follow the ACA’s reporting provisions in 2014. This should ease the transition and allow the full implementation of the law to occur more smoothly.
What the delay means for individuals
According to the announcement, the individual mandate for all Americans to purchase insurance will not be affected by these delays. Beginning in 2014, any individual without essential minimum coverage must pay a penalty to the IRS ($95 per adult in 2014, increasing to $325 per adult in 2015, and $695 per adult in 2016). The implementation of health exchanges, set to go live on Oct. 1, 2013, will also not be affected by these delays.
According to Linda Blumberg, senior fellow at the Urban Institute, one of the main goals of the employer mandate is to ensure that employers don’t stop offering coverage and force their employees into the insurance exchanges. With the delay in enforcing the employer mandate, however, this may be exactly what happens in 2014, causing many to wonder whether it will be possible to enforce the individual mandate.
Without the requirement that employers and insurers report information to the IRS, the system will rely on individuals themselves to report that they are without minimum essential coverage. If Americans find lax enforcement of the individual mandate in 2014, experts believe that younger, healthy individuals will avoid obtaining coverage. This could increase premiums in the exchanges because younger, healthy individuals will not participate and help offset the high costs of covering sick patients.
The delay in implementing the employer mandate has been perceived as an acknowledgement by federal officials of the size of the task ahead. The delay allows additional focus to be placed on perfecting the health exchanges, but because the law is so interconnected, delaying the implementation of one aspect ultimately affects many other portions of the law.
The delay postpones the effective date of the employer mandate to beyond the 2014 midterm elections, which means that the ACA will be a major campaign issue in Congressional races for the third straight election cycle.
The delay may also give Republicans additional time to continue their attempts to repeal and replace the ACA. Some officials, like House Majority Leader Eric Cantor (R-Va.), are using the unpredicted delays to fuel their opinions that the entire ACA is unworkable.
“Rather than continuing to delay the predictable pain until another Election Day has passed, we should scrap this entire law and instead implement patient-centered reforms before any more damage is done,” Rep. Cantor said.
Impact on orthopaedic surgeons
The ACA implementation timeline is changing; orthopaedic surgeons must be prepared for a rapidly shifting American healthcare landscape.
Health exchanges are still set to open on Oct. 1, 2013, and as of Jan. 1, 2014, all individual Americans must obtain minimum essential coverage or pay a penalty. However, the mandatory information reporting by insurers and employers—as well as the penalty payments for all employers with 50 or more employees that don’t offer employee health insurance coverage—will be delayed until 2015.
Alexandra Blumer; Rachel V. Thakore, BS; A. Alex Jahangir, MD; Hassan R. Mir, MD; and Manish K. Sethi, MD, are all affiliated with the Vanderbilt Orthopaedic Institute Center for Health Policy.
ACA Timeline (PDF)
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- Affordable Care Act Implementation Timeline: Democratic Policy Committee. N.p., n.d. Web. July 2013.
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- Delay of ACA’s Employer Mandate Could Hinder Individual Mandate: California Healthline. N.p., 17 July 2013. Web. July 2013.
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- Mazur MJ: Continuing to Implement the ACA in a Careful, Thoughtful Manner. U.S. Department of the Treasury. N.p., 2 July 2013. Web. July 2013.
- Pear R: House Votes to Delay Two Requirements of the Health Care Overhaul. The New York Times. N.p., 17 July 2013. Web. July 2013.
- Viebeck E, Baker S, Parnes A: ObamaCare Employer Mandate Delayed until after 2014 Midterms. The Hill. N.p., 3 July 2013. Web. July 2013.