Lawmakers Pursue Treasury’s Legal Basis for Obamacare Delays

By Charles S. Clark

August 26, 2013

Republican critics of President Obama’s landmark health care law have been vocal in their accusations that the Treasury Department’s decision to delay for a year the implementation of a key provision of Obamacare may be illegal.

Commentators in such publications as National Review and The American Spectator used the issue to call Obama “the lawless president.”

On Thursday, House Energy and Commerce Committee Chairman Fred Upton, R-Mich., joined with three colleagues in demanding that Treasury Secretary Jack Lew hand over memoranda used in making the decision to delay the law’s so-called employer mandate requiring businesses of a certain size to supply health insurance to employees.

On July 2, Treasury made a quiet announcement that it was delaying the provision because additional guidance is needed for employers to comply with certain reporting requirements. The delay was politically explosive because several agencies -- chiefly the Health and Human Services Department and the Internal Revenue Service -- are racing the clock to prepare state-based health insurance exchanges to begin patient enrollment, which will be considered a key test of the law’s viability.

At the same time, Republican opponents of the law have voted multiple times in the House to repeal it and, that having failed, are threatening to shut down the government this fall if Obamacare is not defunded.

Two weeks after Treasury’s revelation of the delay, Upton took to the House floor: “As Americans were gathering with loved ones to celebrate our nation’s independence … a Treasury Department bureaucrat quietly posted a blog detailing a major policy shift in the administration’s signature health law -- the delay of the employer mandate. While it appeared to be a sudden turnabout, today we learned the administration had made the decision in June and that it was considered in a very careful way for a while,” he said.

“This is a direct contradiction to previous testimony before Congress; every single time we had asked an administration witness if implementation was on track, they looked us in the eye and said yes.”

Administration officials in letters and at a July 18 hearing gave their rationale for why the agencies have authority to delay enforcing the provision.

“Because an employer typically will not know whether a full-time employee received a premium tax credit, the employer generally will not have all of the information needed to determine whether it owes an assessable payment under the employer responsibility provisions,” testified J. Mark Iwry, senior advisor to the Treasury secretary and deputy assistant secretary for retirement and health policy. “Recognizing that employers generally will not have all of the necessary information, the statute does not require the employer to calculate an assessable payment or file returns submitting such a payment.”

The administration’s rationale was further described in a July 9 letter to Upton from Mark Mazur, assistant Treasury secretary for tax policy, who cited Treasury’s “long-standing administrative authority to grant transition relief when implementing new legislation like the ACA”-- the affordable care act -- under section 7805(a) of the Internal Revenue Code.

“This authority has been used to postpone the application of new legislation on a number of prior occasions across administrations,” Mazur continued, citing delayed implementation of the 2007 Small Business and Work Opportunity Act and the 2011 Airport and Airway Extension Act.

Officials added that the delay does not affect other provisions and benefits of the health care law.

Upton and colleagues accuse the administration of being “less than forthcoming.” Their letter said the administration’s responses neglected to back up an assertion that the delay was made after consultation with businesses. “Further, Mr. Iwry was not able to provide specific answers to our questions about the decision to delay the employer mandate, including the record before Treasury that convinced the department that a one-year delay was appropriate, which departments reviewed the decision, Treasury’s statutory or constitutional authority to act, and whether Treasury also considered a delay of the individual mandate,” Upton wrote.

Hence the House committee wants to know “who was involved in the decision, data explaining the cost of the mandate on businesses…. and all memoranda or analyses referring or relating to the costs or penalties for individuals under the [ACA] that have been prepared for or by Treasury.”

Lew was given until Sept. 6 to respond.


By Charles S. Clark

August 26, 2013

http://www.govexec.com/oversight/2013/08/lawmakers-pursue-treasurys-legal-basis-obamacare-delays/69407/