Yesterday afternoon, the Treasury Department issued a statement saying that the White House would delay until 2015 the enforcement of the requirement for business to provide workers with health insurance under the Affordable Care Act, aka “Obamacare.”
Under the ACA, businesses employing 50 or more workers would have to offer health insurance or pay a penalty of $2,000 per worker.
Jeff Saut, the top strategist at Raymond James, immediately blasted an email that read: “This is a big deal. A major 2H risk off the table…”
However, UBS’s Drew Matus isn’t convinced that it’s completely positive.
First, here’s the good news:
The Administration announcement of a one-year delay in the employer mandate component of the Affordable Care Act, or “Obamacare”, could help boost payroll growth. Although the delay is only temporary, for those employers on the cusp of the 50 employee threshold this delay may prompt them to hire as they may be unwilling to continue to postpone hiring to avoid being subject to the mandate. Additionally, employers may delay plans to cut back employee hours to keep them from being classified as “full time” (the law considers employees who work 30 hours per week full-time).
Although we see the most likely scenario being that the delay will have a mild positive effect on payrolls over the next few months, the risk exists that another change in regulations only adds to the uncertainty facing businesses. Increased uncertainty could create an even greater sense of caution among hiring managers and may crimp hiring at the margin, on net.
In other words, companies got a delay in cost increases in exchange for longer-term uncertainty.
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