Now that the Supreme Court has upheld most of President Obama’s health care law, U.S. businesses by and large appear skeptical about Republican attempts to repeal the law and are rushing to comply with it, surveys show.
While the political drama over the law is far from over, businesses face significant penalties if they fail to comply with its mandates, including providing health care coverage to all full-time employees starting in 2014.
A survey by Mercer, a human resources consulting agency, immediately after the Supreme Court’s June 28 ruling found that the majority of businesses had been waiting until the court acted before complying with the law.
After the high court’s affirmation, the majority of businesses surveyed said they would start setting up systems for carrying out the mandate and other health reforms, with only 16 percent saying they will wait until after the November elections to see whether Republicans make any headway with their drive to repeal the law, Mercer said.
Mercer and other health care groups are advising businesses not to wait.
“Although the law still faces a contentious political outlook, employers should stay on track in their efforts to comply with the law as enacted or else they may face penalties,” said David Rahill, head of Mercer’s health benefits division.
Many economists hoped the high court’s decision would remove one of the major uncertainties that they believe have caused businesses to hesitate about hiring people this year. Providing health insurance to a typical employee costs an average of more than $10,000 a year, so it is a significant expense, especially for companies that employ mostly low-wage workers.
“The ruling eliminates one source of uncertainty,” said Nigel Gault, an economist at IHS Global Insight. But, he said, Republican attempts to repeal the law and obstruct its implementation are inserting a new element of uncertainty into business planning.
The House passed a repeal bill by a mostly party-line vote last week, but the bill is not expected to advance in the Senate this year. For Congress to enact a repeal bill next year, Republicans would not only have to maintain control of the House, they would have to gain control of the Senate and the White House — a scenario that is not given high odds by most political analysts.
Mercer said businesses will have to act quickly to implement new requirements that go into effect this year and next to provide benefit summaries to their employees, limit the size of flexible health-care accounts and increase withholding of Medicare taxes from high-income earners.
Big challenges ahead
The most challenging aspect of the law — requiring businesses to cover full-time staff working 30 hours a week or more or pay a penalty — will not take effect until 2014. Mercer said about 28 percent of employers continue to express concerns about that mandate, but the rest are preparing to carry it out.
“Employers with large part-time populations, such as retailers and health care organizations, are faced with the difficult choice of either increasing the number of employees eligible for coverage or changing their workforce strategy so that employees work fewer hours,” Mr. Rahill said.
“A big jump in enrollment is not economically feasible for many employers,” and some businesses may end up cutting back the work hours of employees rather than offering the benefits, he said.
While most of the debate in Washington has centered on the requirement that businesses cover their employees, Mercer found that most businesses are focused on a different provision of the law.