Ahead of the Bell: Govt delays overhaul provision

Analysts see little impact to hospitals, insurers from delay in employer health care mandate

Associated Press

Shares of some health insurers and hospital operators slipped in premarket trading Wednesday, a day after the Obama administration announced an unexpected delay for a key provision of the health care overhaul.

The administration said a requirement that medium and large companies provide coverage for their workers or face fines will be delayed from Jan. 1, 2014 to 2015. Under that provision, companies with 50 or more workers must provide affordable coverage to their full-time employees or risk a series of escalating tax penalties if just one worker ends up getting government-subsidized insurance.

The overhaul is designed to provide coverage for millions of uninsured Americans, and the employer requirement is one of the most complex parts of the law. Administration officials said they were reacting to employer concerns about that complexity and the need for more time to implement that part of the law.

Other major provisions of the overhaul remain set to unfold next year. Those include an expansion of the state-federal Medicaid program in many states and the start of income-based tax subsidies that will help people buy health coverage in the individual market.

Analysts noted that most large employers already offer coverage to their workers, so the delayed provision of the law wasn't expected to create a huge enrollment jump for health insurers.

But Tuesday's move raises questions about whether other key elements of the law also will be delayed, BMO Capital Markets analyst Jennifer Lynch said in a research note.

Goldman Sachs analyst Matthew Borsch said the employer mandate delay won't have a significant impact on either insurance coverage or health care spending.

But delays to more significant parts of the law could hurt health insurers and hospitals because they would reduce the number of people who buy health insurance. That would cut down on new business for health insurers and reduce the number of covered patients hospitals treat.

Shares of the nation's largest health insurer, UnitedHealth Group Inc., fell 45 cents to $64.82 Wednesday in premarket trading. Shares of the second-largest insurer, WellPoint Inc., sank $1.33, or 1.6 percent, to $80.05.

Hospital operator HCA Holdings Inc. fell 2.5 percent, or 91 cents, to $36, while shares of competitor Community Health Systems Inc. slipped 34 cents to $46.20.

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