THE ISSUE: Delaying health insurance requirement; OUR OPINION: Opposition among businesses broader than Republican politics
President Barack Obama’s health care reform is unpopular with S.C. leaders who at every turn are rejecting provisions or attempting to nullify the law’s impact on the state entirely. On Tuesday, it was the president himself taking action to delay a key provision of the Obamacare.
Republicans say the decision to delay by one year the requirement that companies provide health insurance for their workers or face fines is about nothing more than helping Democrats in the 2014 midterm elections. They may be right based on indications that businesses are strongly opposed to the requirements, worried about cost and compliance with one of the most complex provisions of the health care law designed to expand coverage for uninsured Americans.
Under the health law, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance. Originally, that requirement was supposed to take effect Jan. 1. It will now be delayed to 2015.
Specifically the provision calls for a penalty of $2,000 per full-time employee on businesses with more than 50 workers if those companies don’t offer a minimum level of health insurance. The penalty increases to $3,000 for each employee receiving coverage through a health insurance exchange and is eligible for federal tax subsidies.
According to reporting by The Associated Press, most medium-sized and large businesses already offer health insurance and the requirement was expected to have the biggest consequences for major chain hotels, restaurants and retail stores that employ many low-wage workers. Some had threatened to cut workers’ hours and others said they were putting off hiring.
“We have heard concerns about the complexity of the requirements and the need for more time to implement them effectively,” Treasury Assistant Secretary Mark Mazur said in a blog post. “We have listened to your feedback and we are taking action.”
Recently, the South Carolina Policy Council’s website devoted to investigative journalism, TheNerve.org, examined the impact of Obamacare on the state’s businesses and found opposition and confusion akin to what is coming from business interests around the country.
In a June 17 story by reporter Rick Brundrett, TheNerve.org reported that six months before the next round of regulations under the Patient Protection and Affordable Care Act (Obamacare), Palmetto State business owners surveyed say they have few, if any, details about how changes will affect their companies.
“The only thing about Obamacare is that it has created a mindset – all of us are on our heels playing defense,” said Det Haislip, who owns True Value Hardware & Appliances in downtown Aiken with his wife, Lyanne Haislip. The store has six employees, he said.
The provision on health insurance alone was expected to impact more than 2,000 South Carolina companies.
But other parts of the law remain on schedule, including the key provision that individuals carry health insurance starting next year or face fines. That so-called individual mandate was challenged all the way to the Supreme Court, which ruled last year that the individual requirement was constitutional, since the penalty would be collected by the Internal Revenue Service and amounted to a tax.
The mandate calls for an income surtax of 1 percent of adjusted gross income or $95, whichever is higher, for individuals who don’t buy “qualifying” health insurance. The individual surtax increases to 2 percent of AGI or $325 in 2015, and 2.5 percent of AGI or $695 in 2016.
Other Obamacare mandates slated for next year include, according to research by Americans for Tax Reform, a nonprofit lobbying organization in Washington that opposes tax increases, and the South Carolina Policy Council, the conservative Columbia-based group that says its mission “is to promote freedom, protect freedom and prove that freedom works”:
* New annual taxes on health insurers tied to insurance premiums collected that year; fully imposed on companies with $50 million in profits.
* A 3.8 percent surtax on investment income for joint filers with adjusted gross incomes above $250,000 (above $200,000 for individuals).
* A Medicare payroll tax hike of .9 percent on earned income over $250,000 for joint filers (over $200,000 for individuals).
* A 2.3 percent excise tax on medical device manufacturers. In South Carolina, there are more than 800 listed medical and equipment device companies, according to the online business site manta.com.
Business groups continue to complain that the law is too complicated in defining full-time workers (30 hours or more) and “affordable” coverage.
For the record, there is no coverage mandate — or penalty — for smaller businesses. And for businesses of any size, there is no penalty if their workers are poor enough to be eligible for Medicaid, though states such as South Carolina are opting out of the Obamacare expansion of Medicaid that would greatly increase the numbers of people eligible.
Republicans call Obama’s decision to delay the insurance provision a validation of their belief that the law is unworkable and should be repealed. Look for their outcries to grow even louder.
As Senate Republican leader Mitch McConnell of Kentucky told The AP: “Obamacare costs too much and it isn’t working the way the administration promised. The White House seems to slowly be admitting what Americans already know ... that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans.”