Delaying Employer Mandate 'Adds to the Confusion,' Witness Tells House Panel

By Susan Jones | July 24, 2013 | 6:18 AM EDT

Draft of application for Affordable Care Act. (AP Photo)

( - Delaying a key part of Obamacare for one year "adds to the confusion," creating "new questions and concerns for business owners and workers," one of several witnesses told a House hearing on Tuesday.

"Across the country, large and small businesses have been making painful decisions to lay off employees, cut workers’ hours, and make do with fewer workers than they really need. This is not what you would expect in a recovering economy," said Grace-Marie Turner, president of the Galen Institute, a free-market think tank.

"The clear distorting factor is the Affordable Care Act, especially the employer mandate that requires businesses with more than 50 employees to provide health insurance or pay a fine," she said.

On July 2, the Obama administration announced in a blog post that it would delay for one year, until 2015, the reporting and enforcement mechanism of the employer mandate. Among other things, that mandate requires businesses to tell the IRS how many employees they have, how many hours those employees work, and whether they have health insurance through the company.

“A one-year delay in the employer mandate will not change the hiring behavior of employers,” Turner said. "Employers are now making decisions about how to restructure their workforce, and they're not going to change that."

Turner told members of the House Education and the Workforce Committee that businesses won't hire full-time employees, knowing they'll have to let them go in a year to keep their workforces under the 50 full-time-employee threshold. "If anything, the delay gives employers more time to figure out how to restructure their businesses and workforces to avoid the added costs of the health law,” she told the panel.

Turner said additional confusion arises because the employer mandate's reporting requirements have been delayed, but not the mandate itself, which says businesses  must provide affordable health insurance. "Perhaps an employee would sue them, saying they've been harmed," beccause the company did not provide health insurance as the mandate requires.

In her opening statement, Turner noted that Obamacare is redefining full-time work as 30 hours a week, rather than the customary 40. That has prompted many employers to start scaling back employee hours, she said. "And many of them are cutting workers back to 25 hours a week to provide a cushion in case employees’ shifts run over. That is a significant income loss for workers, many of whom are at the lower - end of the income scale."

Turner said the "only responsible path" is to delay implementation of the entire law, not just the employer mandate.

Douglas Holtz-Eakin, an economist and former director of the Congressional Budget Office, told the joint subcommittee that the Affordable Care Act will contribute to slower job growth, a greater reliance on part-time workers, and changes in how employees are compensated, as companies are more likely to forgo health benefits and raise monetary compensation.