Thursday, July 4, 2013

Upon Further Review: Delaying ACA Penalties and Consequential Behavior

"The Obama administration said Tuesday it would delay enforcing a provision of the new health-care law that requires large employers to provide coverage for workers or pay a penalty in 2014, the biggest revision so far to the federal health-care overhaul.

The law, passed in 2010, requires companies with the equivalent of 50 or more full-time workers to offer health benefits starting on Jan. 1—or pay a penalty of at least $2,000 per employee. The delay, announced by the Treasury Department in a blog post Tuesday, means that penalty won't kick in until 2015.


The decision reflects pressure from companies in such lower-wage industries as restaurants, retail and agriculture, which had cited a host of practical difficulties posed by the law's requirements. Most large companies in the U.S. already provide health coverage to their employees.

Some companies had bet the law was going to be overturned by the Supreme Court last year, or by a new presidential administration after the 2012 election. After it withstood those legal and political challenges, some firms said there was too little time remaining before the provision was due to kick in.

"They realized they were not ready, and we were not ready," said Neil Trautwein, vice president at the National Retail Federation, an employer trade group. "At the very least, this will give retailers and chain restaurants a chance to breathe."

The decision follows media reports that companies had already cut back on some workers' hours to avoid exposure to penalties under the new health-care law. Those who work fewer than 30 hours a week aren't counted as full-time employees, according to the law.” - Health Law Penalties Delayed - WSJ 07/02/2013‏



Upon further review, consider that interventionists who advocate interventionist policy into economies, to supposedly fine tune a macro economy or as countercyclical measures to a macro economy e.g. Paul Samuelson’s policy, generally use temporary discretionary policy. The classic case is the temporary tax cut and/or rebate vs. the permanent tax cut. The former causing short term behavior that either quickly vanishes or has no impact and the latter causing long term positive behavioral changes.

Keeping the above in mind, delaying the ACA penalty to firms [plus fifty full time employees] until 01/01/2015, given that the firms are already engaged in cutting hours and/or hiring new employees at 28 hours (below the full time threshold of ACA) is, an interventionist policy that is fine tuning in nature. Meaning, it causes short term behavior that either quickly vanishes or has no impact regarding firms engaged in cutting hours and/or hiring new employees at 28 hours.

Moreover, the situation is the interventionist (promoters of government directed health-care/health insurance) who advocates interventionist policy (ACA) trumping his/her own interventionism with more interventionism (delaying provisions).


Link to the entire WSJ article appears below:

Updated 07/08/2013

Obamacare implementation delay no boon for hiring - Yahoo Finance


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