ACA Implementation Continues to Face Challenges

Delaying the employer insurance mandate until 2015 has cost the government an estimated $12 billion in fees. This coming after an assessment conducted by The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) on the impact the delay will have on the Affordable Care Act (ACA) implementation.

Original CBO estimates projected there would be $1.363 billion in costs to the federal government between 2014 and 2023, but now those net costs are an estimated $1.375 billion. The CBO report noted: “The largest change is a $10 billion reduction in penalty payments by employers that would have been collected in 2015. (Penalties assessed for 2014 would have been collected in 2015). Costs for exchange subsidies are expected to increase by $3 billion.”

While the financial impact may not seem that large in the grand scheme of ACA implementation, there are also other rising concerns. The CBO reports that as a result of the employer mandate, roughly 1 million fewer Americans will be enrolled in employer-based coverage, and “of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured and the others will obtain coverage through the exchanges or will enroll in Medicaid or the Children’s Health Insurance Program (CHIP).”

Furthermore, federal decisions to relax the verification procedures for the income and health coverage status of those applying for insurance through the healthcare insurance exchange marketplace may increase those people receiving subsidies.

"Effectively, states no longer need to expand Medicaid, because this newly Medicaid-eligible population can now sign up for the exchanges, at no cost to the state, and know that their incomes won’t be verified by the IRS (because their incomes are too low to file tax returns)," Avik Roy, Senior Fellow at the Manhattan Institute, wrote in a recent article.

The ACA mandated that to qualify for tax subsidies, enrollees would have to have incomes ranging from 100% to 400% of the federal poverty line, and not have access to insurance through their employer. Regulations now allow state exchanges to extend mandated verification of enrollee’s employer-insurance status until 2015. The CBO and JCT expect that this may lead some workers who qualify for affordable employer insurance to obtain subsidized coverage through the exchanges in 2014.

Confirmation of whether someone is truly exempt requires the IRS to know whether the employer offers coverage and for how much. The employer mandate delay has obvious implications on this process. Nicholas Bagley, a law professor at the University of Michigan, said, “"If the IRS doesn't have information about the plans large employers offer, it will be very hard to verify that. It will be an honor system. It could cost the government some money" - especially if individuals avoid the penalty through error or dishonesty.

Around the Web

Obamacare Mandate Delay Costs $12 Billion, Cuts Insurance Coverage [Washington Post]

Analysis of the Administration’s Announced Delay of Certain Requirements Under the Affordable Care Act [Washington Post]

US Relaxes Health Law Income, Insurance Status Rule for Exchanges [IT Business Net]

Not Qualified For Obamacare's Subsidies? Just Lie -- Govt. To Use 'Honor System' Without Verifying Your Eligibility [Forbes]