- 07/02/13 05:37 PM ET
The ObamaCare employer mandate requiring businesses to provide their workers with health insurance will be delayed by a year, the administration said Tuesday in a stunning announcement.
Delaying the requirement until 2015 represents an enormous victory for businesses that had lobbied against the healthcare law.
It also means that one of healthcare reform's key requirements will be implemented after the 2014 midterm elections, when ObamaCare is expected to be a key issue for vulnerable Democrats.
In a White House blog post, senior adviser Valerie Jarrett wrote that the administration believed they needed to give employers "more time to comply with the new rules."
"This allows employers the time to test the new reporting systems and make any necessary adaptations to their health benefits while staying the course toward making health coverage more affordable and accessible for their workers," Jarrett wrote Tuesday evening.
Jarrett also wrote that the delay would help in "cutting red tape and simplifying the reporting process."
"We have heard the concern that the reporting called for under the law about each worker’s access to and enrollment in health insurance requires new data collection systems and coordination," Jarrett said. "So we plan to re-vamp and simplify the reporting process.
Jarrett added that the administration "will convene employers, insurers, and experts to propose a smarter system and, in the interim, suspend reporting for 2014."
Administration officials said on Tuesday that other aspects of the law wouldn't be delayed.
The employer mandate affected businesses with more than 50 workers.
Republicans seized on the news, arguing on Twitter that the delays suggested the law was a "train wreck" and that Democratic candidates in 2014 would have difficulty explaining the delay.
"Terrible for 2014 Dems to delay their own law because its a wreck," said National Republican Senatorial Committee communications director Brad Dayspring in a message on Twitter.
Some Democrats had openly fretted about the law's implementation.
Sen. Max Baucus (D-Mont.), one of the primary architects of the healthcare law, warned in April that small businesses were struggling to come to grips with their new responsibilities.
"Small businesses have no idea what to do, what to expect," Baucus told Health and Human Services Secretary Kathleen Sebelius at a hearing.
"I just see a huge train wreck coming down,” Baucus said.
The U.S. Chamber of Commerce praised the delay.
“The administration has finally recognized the obvious – employers need more time and clarification of the rules of the road before implementing the employer mandate," said Randy Johnson, the Chamber's senior vice president for labor, immigration, and employee benefits:
"The Chamber has testified numerous times about the problems with the mandate, and we applaud the administration’s step to delay this provision. We will continue to work to alleviate this and other problems with ObamaCare.”
"I hope that this means that employers who have been cutting employees to part time will now call them back to full-time employment, but regret that the administration is delaying the implementation of an important provision of the ACA," said Timothy Jost, a law professor at Washington and Lee University and a strong supporter of the healthcare law.
The change will likely mean that more people buy individual coverage through the law's new insurance exchanges, which are supposed to be open for enrollment by Oct. 1. If fewer employees have access to coverage through work, at least some will likely turn to the exchanges for coverage and a tax credit to help cover the cost.
Treasury's announcement does not affect the individual mandate, which requires most taxpayers to either purchase insurance or pay a penalty.
The political effects of the delay could be more severe than the effect on the law's expansion of healthcare coverage. In its most recent estimates before the delay was announced, the Congressional Budget Office said the number of people with employer-based coverage was not expected to change next year.
The penalty for employers that failed to offer coverage was also not expected to bring in any money next year, according to CBO's latest estimates.
This story was updated at 6:28 p.m.