House Republican efforts to postpone, block and repeal Obamacare were key reasons for the federal government-shutdown crisis, under which 800,000 federal employees stayed home beginning Oct. 1.
The House Republicans, whose opposition to Obamacare paralyzed spending bills, demanded that the administration acquiesce on two demands:
- postpone the “individual mandate” that individuals have federally approved minimum essential coverage or pay a penalty for one year; and
- take away federal subsidies the administration gave to members of Congress and their staffs, after it became apparent the members and staffs would lose their employers’ contribution to exchange coverage (the law mandated that Congress members and staff obtain coverage on exchanges instead of through a federal employee benefits plan) without a fix.
Chaos at the Top
During the budget negotiations, House Republicans also touted not raising the debt ceiling unless concessions are made to delay or repeal parts of health care reform. In response, President Obama said that he shouldn’t have to offer anything to Republicans in order to avert the crisis.
“They’re not doing me a favor by paying for things that they have already approved for the government to do,” Obama said in an interview on Sept. 30. “That’s part of their basic function of government; that’s not doing me a favor. That’s doing what the American people sent them here to do, carrying out their responsibilities,” he told an NPR reporter. Obama said he would consider ways of changing the law in negotiations, but without connecting them to this budget cycle.
Senate Majority Leader Harry Reid, D-Nev., said the law would not be changed in response to the House’s budget-blocking actions. “We will not go to conference with a gun to our heads,” Sen. Reid said, demanding that the House accept the Senate’s six-week stopgap spending bill before negotiations over a broader budget deal move forward.
The Senate proposed keeping the government open for six weeks while the two parties discuss policy. He argued that the House had tried and failed to repeal health care reform in 40 separate votes over the last three years; and that the effort would not pass the U.S. Senate because a veto-proof majority in the Senate would require 67 votes.
The House refused.
Representing the House Republicans in an interview on CNN, Rep. Jason Chaffetz, R-Utah, said delaying the individual mandate is in line with a host of employer-mandate delays to accommodate business compliance that Obama instituted in the past two months. That included a suspension of pay-or-play penalties under the large-employer mandate to cover employees or pay a penalty.
Note: The penalty for violating the individual mandate is a slap-on-the-wrist $95 (or one percent of annual salary, whichever is greater) in 2014; it increases to $395 (or 2 percent) in 2015 and $695 (or 2.5 percent) in 2016.
Also, the GOP legislators wanted to reverse a federal decree that allowed congressional staffers to remain under their current federal health plan and not to go onto exchanges. Rep. Chaffetz said this constituted “special treatment” that Congressional members and staff should not get.
On the evening of Sept. 30, a subset of House Republicans staged a mini-rebellion, trying to shear off 17 GOP votes that would have allowed the government to stay open. But they failed, getting only six votes.
Impact on Implementing Agencies
The agency that oversees employee benefits (namely the DOL’s Employee Benefits Security Administration) will be running on a skeleton crew. According to a Sept. 25 DOL memo, EBSA normally has 986 employees, and is now running on a staff of 46.
EBSA employees that will be working in spite of the shutdown are the top dozen officials in the Assistant Secretary (for EBSA)’s office, and the remainder are investigators and prosecutors at EBSA regional offices. Those staffers will be kept on because of their involvement in: (1) criminal cases involving ERISA plans; (2) pursuing civil cases that pose imminent threat to plan assets and other property; and (3) addressing situations where an ERISA benefits dispute could pose imminent threat to human life.
According to this Contingency Staffing Plan for Operations, the U.S. Department of Health and Human Services said the Centers for Medicare and Medicaid Services would “continue large portions of [health care reform] activities, including coordination between Medicaid and exchanges, insurance rate reviews, and assessing medical loss ratios by insurers.” CMS normally employs 5,994 workers; under the shutdown 2,113 will go to work.
Impacts on Employer Plans
Employers in their role as health plan sponsors will feel little immediate impact from the shutdown, but the shutdown could slow the development of health-reform guidance for employers, and it raises the possibility of disrupting ongoing rulings, says attorney Paul Hamburger, a partner with Proskauer Rose in Washington, D.C.
Employers awaiting guidance they need to comply with new health benefit administration rules could be impacted. “To extent they’re not working, they’re not working on guidance that we need,” Hamburger said. Two big examples are: (1) the “post-Windsor” treatment of domestic partner benefits; and (2) health care reform.
Second, there will be effects on a few employers that have a ruling – such as a qualified plan determination or private letter ruling – pending before a closed government agency. “If you have such a matter, we hope the agency reaches out with an alternative plan,” he says.
“Suppose you have a deadline to respond to the government tomorrow [or another day during the shutdown], and [your agency is] closed. We would hope the deadline would be extended until the shutdown is over, but we’ll have to see how that happens,” Hamburger says.