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Capretta's Must-Read Congressional Testimony

10:00 AM, Jul 10, 2013 • By WILLIAM KRISTOL
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James Capretta is testifying today before the House Ways and Means Committee on the Obama administration's announcement of a delay in Obamacare's employer mandate. Capretta's testimony is an excellent and judicious summary of the implications of the Obama administration's decision, along with a consideration of possible congressional responses. It's reproduced below, and is well worth reading. His conclusion: "Therefore, this committee should seriously consider legislation that couples delays in the employer and individual mandates with a simultaneous delay in the entire exchange roll-out." 

Testimony Presented to the House Ways and Means Committee:
“The Obama Administration’s Delay of the Employer Mandate”
James C. Capretta
Senior Fellow, Ethics and Public Policy Center and Visiting Fellow, American Enterprise Institute
July 10, 2013

Mr. Chairman, Ranking Member McDermott, and members of the subcommittee, thank you for the opportunity to participate in this very important hearing on the Obama administration’s decision to delay enforcement of the employer mandate enacted in the Patient Protection and Affordable Care Act (PPACA).

This unilateral decision raises many more questions than it answers. It also needs to be assessed in tandem with the decision, announced last Friday, to essentially abandon independent income verification of some applicants in the exchanges until 2015. These decisions will exacerbate the problems that are already undermining effective implementation of the law for 2014.

The decisions to abandon the employer mandate for 2014 and to allow applicant attestations in some instances were announced only last week; it will take some additional time before the full implications are known and understood. Nonetheless, in my testimony, I will provide some initial observations about what they mean for employers and the federal budget, and for broader implementation of the 2010 health care law. I also offer my recommendations to the committee and to Congress regarding what I believe would be an appropriate legislative response to the administration’s recent announcements.

What the Administration Announced

Technically, the administration did not announce a delay in the employer mandate, which was enacted by Congress with a clear start date of January 1, 2014. What was announced -- in the form of a blog post from the Assistant Secretary for Tax Policy in the Treasury Department -- was a one-year delay in the reporting requirements necessary to enforce the employer mandate.2 The administration simply noted in its announcement that the delay in collecting the relevant data from employers would necessarily mean a simultaneous delay in determining which employers owe “shared responsibility” payments. Thus, the entire “employer mandate” structure was put off for a year through the back door of an administrative decision to not collect information.

Some have questioned the administration’s legal authority to take this unilateral action regarding these reporting requirements. It is certainly clear that what the administration’s current plan is not consistent with the intent of the statute. Congress put in place this mandate, and a reporting system to enforce it, to begin in 2014, not 2015. When the law says that the Secretary has discretion over the timing and manner of employer reporting, it’s obvious that this was not intended to mean the Secretary could decide to start employer reporting for activity occurring in 2015. That makes no sense in the context of what is required of employers under the law.

I am not a lawyer. I will leave it to others to debate whether the administration can stretch the meaning of the words in the statute to justify what they are doing. I would only note that no one has yet disputed that it is clearly inconsistent with what Congress intended.

Moreover, even if the reporting requirements are delayed and the administration looks the other way on employer penalties, the law’s requirements are not wiped away by an administrative act. Employers are still -- by law -- subject to the employer mandate and associated penalties in 2014, whether or not the administration collects them. A blog post, or a regulation for that matter, cannot undo the mandate in 2014. That step can only be achieved by another act of Congress.

The Harmful Economic Consequences of the Mandate Will Not Go Away

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