J. Scott Applewhite, AP
WASHINGTON — There's a bit of a domino effect undercutting President Barack Obama's health care law.
Enforcement of the overhaul's central mandate — that individual Americans must have coverage — could be weakened by the Obama administration's recent delay of a requirement that larger employers provide medical insurance.
That's because the delayed rule also required companies to report health insurance details for employees. Without employers validating who's covered, a scofflaw could lie, and the government would have no easy way to check.
The Treasury Department said Tuesday it expects any impact to be minor, since most people will not risk telling the government a lie. Still, it's another incentive for uninsured people to ignore a new government requirement that for many will cost hundreds of dollars.
"If Americans begin to figure out that the individual requirement is toothless for 2014 ... younger, healthier uninsured people will stay away in droves," said Edward Fensholt, director of compliance services for the Lockton Companies, a benefits consulting firm that advises employers. With fewer healthy people in the pool, premiums in new health insurance markets coming this fall could rise.
The latest twist emerged a day ahead of votes in the Republican-led U.S. House to delay both the individual and employer mandates. The House measures, which have little chance of advancing in the Senate, are part of a series of Republican attempts to repeal or defund "Obamacare."
The administration declined to address the new enforcement concerns on the record.
Instead, a senior Treasury official, commenting on condition of anonymity, said it's only a hypothetical problem and the administration does not believe a significant number of people will choose to flout the law. After all, most Americans truthfully report their annual income to the Internal Revenue Service, said the official, who spoke only on condition of anonymity because the official was not authorized to comment publicly by name. However, most people know the IRS already has the income information from their employers on W-2 forms.
Coverage for the uninsured through President Barack Obama's health care law starts next Jan.1. Middle-class people with no access to job-based health insurance will be able to buy subsidized private coverage through new online markets that open for enrollment Oct. 1. Low-income people will be steered to an expanded version of Medicaid, in states accepting it.
The individual requirement that most Americans carry health insurance also takes effect in 2014, when insurers will no longer be allowed to turn away people in poor health. The mandate narrowly survived a Supreme Court challenge last year.
The employer requirement applies to companies with 50 or more full-time workers. They can be fined for not offering affordable coverage. Earlier this month, the White House unexpectedly delayed the employer mandate for a year, until 2015. The administration said more time was needed to work out complicated reporting requirements so they do not become a burden to businesses. Some saw a political motivation in the deferral, removing a controversial issue from the arena during a midterm election year.
The employer requirement was never designed to get large numbers of uninsured people covered. Instead, lawmakers meant it as a guardrail, to keep employers from dropping coverage and shifting responsibility to the government.
The individual requirement, however, was always seen as a linchpin of the law. Although there are exceptions for financial hardship and other circumstances, most individuals risk fines starting next year if they remain uninsured. Those penalties start small — as little as $95 in 2014 — but they ramp up in the years after.
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