Eddie Lou: A prudent postponement

July 8, 2013 

The White House delayed for one year a requirement under the Affordable Care Act that small businesses provide health insurance to its employees.

This provision, commonly known as the employer mandate, calls for businesses with 50 or more workers to provide affordable, quality insurance to workers or pay a $2,000 fine per employee. Business groups and trade associations had objected to the provision, which now will take effect in January 2015.

Businesses and Trade Associations reacted with relief to the Obama administration's decision to give large and midsize employers until 2015 to provide health care coverage for their workers or face fines.

"We commend the administration's wise move," said National Retail Federation Vice President Neil Trautwein. "This one-year delay will provide employers and businesses more time to update their health-care coverage without threat of arbitrary punishment."

The National Restaurant Association has been one of the top employer groups arguing for transition rules and more flexibility for employers as the law is implemented.

"We view today's announcement as recognition that the administration has listened to the National Restaurant Association about the concerns of our members, the complexity of the requirements, and the need for additional time to be able to comply effectively," said Dawn Sweeney, president and CEO of the restaurant association.

Some analysts saw the change as a responsible move to accommodate smaller businesses. It could also help the public education campaign to persuade the uninsured to sign up for coverage. Others see the change as an early indicator that the health-care law might collapse under its own weight.

Now that small businesses have won the first battle, they see hope to win the war. From retail chains to restaurants to school districts, many claimed they would cut work weeks below the 30-hour threshold to dodge the new mandate. Some small-business groups that opposed the law entirely said the move didn't go far enough. They are still lobbying for changes that will require coverage only for employees who work at least 40 hours a week, rather than 30, along with other fixes, said National Federation of Independent Business spokeswoman Cynthia Magnuson. "This is a temporary fix and we need long-term relief," Magnuson said.

What does all of this mean in the short term? Restaurants, retail businesses and hotels have 18 months before both the new requirements take effect, so they will be more comfortable hiring, allowing more hours per employee, and expecting fewer near-term layoffs. This is obviously a positive indicator for the U.S. labor force, employment levels and small-business profits.

Eddie Lou, co-founder and CEO of www.shiftgig.com; email, eddielou@shiftgig.com.

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