WASHINGTON -- In a significant setback for President Barack Obama's signature domestic initiative, the administration on Tuesday abruptly announced a one-year delay, until 2015, in his health care law's mandate that larger employers provide coverage for their workers or pay penalties. The decision postpones the effective date beyond next year's midterm elections.
Employer groups welcomed news of the concession, which followed complaints from businesses and was posted late in the day on the White House and Treasury websites, while the president was flying home from Africa.
While the postponement technically does not affect the law's other central provisions -- in particular, those establishing health insurance marketplaces in the states, known as exchanges, where uninsured Americans can shop for policies -- it throws into disarray the administration's effort to put those provisions into effect by Jan. 1.
"I am utterly astounded," said Sara Rosenbaum, a George Washington University professor of health law and policy and an advocate for the law. "It boggles the mind. This step could significantly reduce the number of uninsured people who will gain coverage in 2014."
Under the law, most Americans will be required to have insurance in January 2014, or they will be subject to tax penalties. The announcement Tuesday did not say anything about delaying that requirement or those penalties.
Administration officials sought to put the action in a positive light in the online announcements, and emphasized that most Americans' existing insurance coverage would not be affected.
The 2010 Affordable Care Act required employers with more than 50 full-time workers to offer them affordable health insurance starting next year or face fines.
Some companies with payrolls just above that threshold said they would cut jobs or switch some full-time workers to part-time employment, so they could avoid providing coverage.
Under the provisions to set up state-based marketplaces to cover uninsured Americans, subsidies are supposed to be available for lower- and middle-income people who qualify and are not insured through their employers.
By delaying the mandate for businesses and its reporting requirements, the government may be unable to confirm before 2015 whether employers are offering insurance to their employees, making it difficult for the exchanges to know who is entitled to subsidies to help pay for policies.
Enrollment in the exchanges is to begin Oct. 1, with insurance coverage taking effect Jan. 1. Yet even some supporters of the law dispute that establishment of the health insurance exchanges is on schedule, especially since progress varies by state, and some Republican-led states are resisting the health care law and withholding resources for putting it into effect.
Much of the administration's public effort, especially at the Department of Health and Human Services, has been directed toward spreading the word to uninsured Americans, especially younger and healthy people whose participation is needed to help keep down premiums for everyone else.
Behind the scenes, however, the administration has been fielding questions and criticisms from businesses about the reporting requirements.
Employer groups were quick to applaud the delay.
E. Neil Trautwein, a vice president of the National Retail Federation, said the delay "will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment." James A. Klein, president of the American Benefits Council, a lobby group for large employers, welcomed the "breathing room."
Mr. Mazur, the Treasury official, said the delay "will allow us to consider ways to simplify the new reporting requirements consistent with the law. Second, it will provide time to adapt health coverage and reporting systems while employers are moving toward making health coverage affordable and accessible for their employees."
Within the next week, Mr. Mazur said, Treasury will issue official guidance to insurers, self-insuring employers and other parties that provide health coverage. Formal rules will be proposed this summer, he added, but the administration will encourage employers to comply with the law's reporting provisions in 2014, as originally mandated.
Democrats were all but silent. Adam Jentleson, spokesman for Senate Majority Leader Harry Reid, D-Nev., said in a statement late Tuesday: "Both the administration and Senate Democrats have shown, and continue to show, a willingness to be flexible and work with all interested parties to make sure that implementation of the Affordable Care Act is as beneficial as possible to all involved. It is better to do this right than fast."
Republicans immediately reacted with statements claiming vindication for their efforts to repeal the law altogether.
Senate Minority Leader Mitch McConnell, R-Ky., who faces re-election next year, said in a statement, "The fact remains that Obamacare needs to be repealed and replaced with common-sense reforms that actually lower costs for Americans."
Religious groups write a letter to protest health care rules. Page A-2