The delay in the healthcare employers mandate has dealt the Obama administration a black eye, at a time when the president desperately needs a political win.

Political observers agreed that the decision to delay the mandate until 2015, which the administration announced on Tuesday, is a setback for Obama, who is currently attempting to shoehorn immigration reform legislation through the House to secure one of his legislative priorities in his second term.

It also casts a shadow on Obama’s one major legislative accomplishment and could possibly put a dent in his legacy, observers said.

“If healthcare were to be his one major victory and it is seen as flawed and resisted to some good effect for the remainder of his presidency, that would be a hit to his legacy and it might take him off the list of great Democratic presidents,” said Cal Jillson, a professor of political science at Southern Methodist University.

Even some of the business lobbyists who had urged the administration to push back its rules were unprepared for the news that appeared on a Treasury blog Tuesday evening, when much of Washington had already left town for the holiday.

“Honestly, it was a surprise that it came this quickly,” said Matt Haller, vice president of the International Franchise Association. “We certainly felt like we were making headway, but we didn’t get any hints until yesterday.”

Interviews with business associations and health care groups show an administration under huge pressure as a major deadline for President Barack Obama’s signature legislative achievement neared. The business lobbyists mounted a coordinated campaign to convince senior White House officials that their date for requiring coverage was simply impractical. Ultimately, the White House agreed.

ObamaCare supporters say they can live with a one-year delay in the law’s employer mandate — as long as the delays don’t keep coming

[W]hile the employer mandate is indeed very complicated, it doesn’t even come close to the intricacies of the law’s cornerstone — new insurance exchanges that must determine whether people are subject to the law’s individual mandate, help them buy insurance, and determine how big of a tax subsidy they should get to help cover their premiums…

Still, to the law’s critics, punting on an easier undertaking seems like a clear sign that all is not well in the implementation effort. Conservatives used the delay to question whether the administration is up to the task of having exchanges ready to go in every state by Oct. 1 — a deadline officials repeatedly vowed to meet.

“The administration doesn’t go around looking for ways to make implementation harder,” said Michael Cannon, a healthcare analyst at the Cato Institute. “This decision can only be understood as an effort to take the path of least resistance – and if this is the path of least resistance, then ObamaCare itself must be even more chaotic.”

National health insurance plans aimed at giving consumers more choice might be unavailable in some states next year, leaving residents with fewer options and potentially higher premiums.

Such “multi-state” plans were included in the federal health law to boost competition among insurers, particularly in states with few carriers. They were also seen as a consolation to supporters of the failed effort to require a government-run “public option.”…

Commenters also raised concerns about whether consumers will actually see more choice.

“Does this increase competition, or does it give the dominant insurers a bigger share of the market?” said Kirsten Sloan, vice president of the National Partnership for Women & Families, an advocacy group in Washington that submitted comments. “That remains a question for us.”

Facing tight deadlines and daunting workloads, states across the country are scaling back ambitions for implementing the Affordable Care Act.

At a monthly board meeting of Connecticut’s health insurance exchange, members of the standing-room-only crowd got a reminder that they, too, were behind schedule. The insurance marketplace they were working on nights and weekends won’t be completely ready on time.

“It is highly complex, it’s unprecedented and it’s not going to be smooth,” Kevin Counihan, chief executive of the state’s exchange, Access Health CT, told the group…

“This is a two- to three-year implementation we’re doing in 10 months,” Counihan said. “I wish we had one more year.”

House Republicans are investigating the Obama administration’s move to delay a key part of the health care overhaul, claiming the announcement was “completely at odds” with prior claims that ObamaCare was running on schedule and questioning what provisions might be delayed next.

“It’s clear we have no idea the full scope of delays and disarray that may be coming. The American public deserves answers,” Rep. Fred Upton, R-Mich., chairman of the House Energy and Commerce Committee, said in a statement…

Republicans on Upton’s committee fired off a pair of letters on Wednesday to both the Treasury Department and Department of Health and Human Services. They demanded records detailing deliberations regarding the recently announced delay and ongoing talks about other “elements” of the law that some groups want “changed, delayed or repealed.”

President Barack Obama may be breaking his Obamacare law by delaying its tax penalties on employers that don’t provide health care to employees, according to GOP leaders. The question comes in the days after Obama’s deputies’ June 2 announcement that employers will get a one-year holiday from the federal tax penalties included in the massive Obamacare law…

But there may be no remedy, because the Democratic majority in the Senate will likely block any legislation passed by the Republican House, and judges can reject lawsuits on the grounds that no particular person is harmed by the one-year tax-holiday…

Also, the administration may be able to argue to Democrats, judges, the media and the public that it is complying with the complex law’s complex requirements.

That’s because the law gives the administration the authority to schedule reporting requirements.

House Republicans need to focus on turning the administration’s retreat on Obamacare into a rout. In light of the administration’s announced delay of the employer mandate, they could move immediately to delay the individual mandate as well, and/or the legislation as a whole.

This would put huge pressure on Democrats to explain why big business gets a break but not workers and individuals. It would also highlight how bad Obamacare is—you don’t delay something that’s a boon to the country. The House GOP could also call Health Secretary Kathleen Sebelius and others to hearings to explain what legal authority the administration has to selectively delay or enforce the legislation. They could also hold hearings to highlight how dangerous the implications of particular parts of Obamacare are both for our health care and our liberty (e.g., the HHS/IRS religious mandate).

In sum, House Republicans could make July the cruelest month for Obamacare, if they seize this moment of opportunity.

Over at the Weekly Standard, Bill Kristol makes the case for the GOP to call for a delay of the individual mandate, which remains one of the most unpopular provisions of Obamacare. The populist critique here is pretty clear. Under intense lobbying from big businesses, the Obama administration caved by delaying the employer mandate until 2015. But the individual mandate, which hits average Americans and happens to be supported by insurance industry lobbyists, is still on track to be implemented in 2014…

[T]he bigger problem for the administration here may be a legal one. As a number of people have noted, it’s questionable whether the Obama administration had the authority to delay the employer mandate without Congress, because the law says that the mandate “shall apply to months beginning after December 31, 2013.” Administration officials likely assumed they could get away with this unilateral action because it’s unclear who has both the motive and standing to sue.

With regard to the individual mandate, however, the insurance industry could have both. In fact, the insurance industry could sue by largely citing the Obama administration’s own briefs in the health care lawsuits about how essential the individual mandate is to a functioning health insurance market. It would be pretty awkward if Obama’s lawyers had to go back to court, this time to defend the administration’s right to delay the same individual mandate that they spent years fighting for in court.

When key Obama adviser Valerie Jarrett wrote, after the delay announcement, that, “We are full steam ahead for the marketplaces opening on Oct. 1,” she was reflecting the administration’s determination to get the health care exchanges up and running no matter what. Delay the employer mandate? OK. Waive this or that rule? Fine. Just make sure the exchanges get going.

There’s a reason for that.

Obamacare is designed to increase the number of Americans who depend on the government to pay for health insurance. It will expand the Medicaid rolls, and it will give subsidies to millions of individuals and families to purchase insurance on the exchanges. In all, the government will be transferring hundreds of billions of dollars to Americans for health coverage.

The White House knows that once those payments begin, repealing Obamacare will no longer be an abstract question of removing legislation not yet in effect. Instead, it will be a very real matter of taking money away from people. It’s very, very hard to do that.