Will the Obamacare Delay Spur Job Creation?

Joe Goldman |

The Obama Administration has decided to give businesses an extra year to comply of the Affordable Care Act, commonly known as ACA or “Obamacare.” The new policy will require businesses with 50 or more employees to provide medical coverage to full-time workers by 2015, one year later than originally expected.

Some believe that the healthcare mandate will deter businesses from hiring in order to cut costs. With the employment rate well over seven percent, the change in policy could have been made in part to encourage job creation. However, the economic impact is expected to be relatively minor, possibly even negligible. Most experts believe other motives were at stake.

Mark J. Mazur, the Treasury Department’s assistant secretary for tax policy, says the policy change was made to allow the government to simplify the reporting process. “We recognize that the vast majority of businesses that will need to do this reporting already provide health insurance to their workers, and we want to make sure it is easy for others to do so.”

Others believe that the move could have been political. “Obviously, by definition, the administration thought that it was beneficial both substantively and, I would imagine, politically, or else they wouldn’t have done it,” Peter Orszag, of Citigroup (C) told CNBC on Wednesday. However, Orszag believes the primary goal of the delay is to simplify reporting.

While the effects of the policy change remain widely disputed, the announcement is certainly bad news for healthcare providers. The Health Care SPDR (XLV) pared early losses and closed down a fraction of a percent. Hospital owners especially underperformed on Wednesday, with HCA Holdings (HCA) down 3.85 percent, Tenet Healthcare (THC) down 4.34 percent, and Health Care REIT (HCN) off 1.21 percent.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
HCA HCA Holdings Inc. 74.91 -1.21 -1.59 2,991,684
HCN Welltower Inc. 76.80 0.40 0.52 2,816,385
THC Tenet Healthcare Corporation 21.35 -0.62 -2.82 1,776,863
TSEM Tower Semiconductor Ltd. 15.02 -0.29 -1.89 395,105

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