What's the Political Fallout of the Obamacare Delay?
The Obama administration's decision to delay the health law's mandate that larger businesses offer workers health insurance does not strike at the core of new system. But it underscores the administration's complex challenge in implementing it, and emboldens opponents trying to block it.
What the administration deferred was the law's requirement that American businesses with at least 50 full-time employees offer health insurance or face a penalty of $2,000 per worker. Because most businesses are smaller than that, and most larger businesses already offer coverage without the mandate, the vast majority of American business owners and workers alike will not be directly affected.
Moreover, the delay does not apply to the law's central features: the requirement that individual Americans themselves obtain health coverage, and creation of insurance marketplaces where they can do so on better terms than insurance companies now offer. Beginning Jan. 1, 2014, White House officials say, that "individual mandate" kicks in as scheduled—and won't be delayed.
(Read More: Here Are Winners and Losers in Obamacare Delay)
But the delay does bring potential costs, financially and politically.
Without the employer mandate, large firms not offering coverage will be spared the $2,000 per worker penalty that the law planned to offset the cost of employing those workers. At the same time, the less insurance employers offer, the greater the taxpayer subsidies those government insurance marketplaces must make available to low-income workers to help them buy policies.
Politically, the delay gives new ammunition to critics who have argued that the law's cost and complexity pose too great a burden on the recovering economy. Though economists generally see the law's overall economic effects as small, they have become the focal point of Republicans who have sought either to repeal the law or erect obstacles to its implementation.
House Speaker John Boehner gave voice to that argument when the delay was announced, calling it confirmation from the administration itself that Obamacare is "a train wreck" in the process of occurring.
The administration hopes for two offsetting politics benefits. One is diminishing resistance from segments of the business community most affected by the employer mandate, including some retailers, franchisees, and hospitality industry businesses that rely on low-wage workers with significant seasonal variations in employment levels.
The other, heading into 2014 mid-term Congressional elections, is muting Republican arguments that the mandate will cause large numbers of firms to avoid hiring additional workers or shift full-time workers to part-time status to keep them from counting against the 50-employee threshold.
—By CNBC's John Harwood. Follow him on Twitter: @JohnJHarwood