Does the Obama Administration Have the Authority to Delay Obamacare's Employer Mandate?


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Last week the Obama administration unexpectedly announced that it would delay the implementation of Obamacare's employer mandate, which requires businesses with 50 or more employees to provide qualifying health coverage or pay a per-worker penalty. Whether or not this is good policy—virtually everyone agrees that the employer mandate is poorly designed—there's real question about whether the move is legal.

There is even some Democratic skepticism about whether the administration's move is justified. "This was the law. How can they change the law?" asked Tom Harkin (D-Iowa), an author of the health law and the top Democrat on the Senate Health, Education, Labor and Pension Committee, according to The New York Times.

In response to questions about the legality of the delay, White House Press Secretary Jay Carney declared flatly this afternoon that "the ability to postpone the deadline is clear," and that delay is "not an unusual process." Carney called Harkin's questioning "willfully ignorant."

Writing in The Wall Street Journal, former Tenth Circuit Appeals Court judge Michael McConnell begs to disagree. Noting that according to a 1990 memo by the Justice Department's Office of Legal Counsel, the president "does not have the right to refuse to enforce a statute he opposes for policy reasons," McConnell writes that the health law has no provision allowing the administration to suspend the employer mandate. He points to Section 1513(d) of the law, which governs the employer mandate provisions, and states clearly that "the amendments made by this section shall apply to months beginning after December 31, 2013."

The Cato Institute's Michael Cannon offers further analysis to this effect. Although the law gives the Health and Human Services Secretary the authority to determine when to collect the penalties that result from the employer mandate, he writes, it does not provide the authority to waive the penalty entirely. There is a provision allowing the Treasury Department (which is officially responsible for the delay) to waive the penalty on a state-specific basis if a state can show that it has enacted an alternate but equally expansive coverage scheme that does not add to the federal cost, which is clearly not the case here. But even if it was, the provision does not allow this waiver to go into effect until 2017.

Nor does the law give Treasury the authority to delay the law's employer reporting requirements. Treasury's announcement last week cited the delay of these requirements as the reason for the mandate's delay, noting that without the reporting requirements to indicate which employers offered qualifying coverage, it would be "impractical" to determine which employers had to pay the penalty. As Cannon notes, the law does give Secretary the authority to decide when to collect that information—but not the authority to delay collecting it until the next calendar year. The law states that the reporting requirements are effective in "calendar years beginning after 2013," and begin in the months "after December 31, 2013." That pretty clearly seems to include 2014. 

All of which makes Carney's assertion that the delay authority is "clear" more than a little dubious. The clearest reading is in fact that the administration does not have the authority to delay the employer mandate. And despite Carney's insistence that the move is obviously legal, the administration does not seem prepared to defend the decision at length from critics. The House scheduled a hearing on the delay for today. The White House, however, declined to send a representative to make its case.