By Janet Trautwein, NAHU.org
With each passing day, the price tag for Congress’s health reform plan seems to shoot higher. Nervous lawmakers are flailing about in search of the trillions of dollars they need.
The latest “solution” is to make somebody else pay for it. Several lawmakers are looking to mandate that businesses pick up the health insurance tab for employees and their families or face a hefty payroll tax.
Unfortunately, this “pay-or-play” ultimatum would cripple businesses, particularly smaller ones that have been reeling because of the recession. In the end, by mandating that employers provide insurance, Congress would force many of the workers they’re trying to help out of their jobs.
How would pay-or-play work? The House Democrats’ plan would compel firms with annual payrolls of $500,000 or more to cover at least 72.5 percent of an individual worker’s insurance premium or 65 percent of the premium for each worker’s family. If a business chose not to play along, it’d pay a tax of between 2 and 8 percent of its employees’ wages.
Health plans would have to meet federal standards for minimum benefits, co-pays, deductibles, and the like — even if the employee didn’t want a policy that adhered to such standards.
A study from the National Federation of Independent Business concluded that an employer mandate would cause the economy to lose 1.6 million jobs within the first five years. The Congressional Budget Office warns that low-wage jobs would be among the first eliminated — a cruel blow to those at the bottom of the economic ladder trying to work their way up.
Of course, we expect the nation’s largest companies to provide coverage for their employees. But under the House plan, even small businesses with razor-thin profit margins would be forced to provide insurance for their workers. A mom-and-pop firm with just six employees each earning a five-figure salary, for instance, would easily surpass the $500,000 payroll threshold where the mandate would kick in.
Most employers already provide health benefits to their employees without being bullied to do so, despite soaring health care costs. Indeed, 71 percent of Americans employed by private firms have access to employer-sponsored health benefits.
These employers invest in their workers’ health because they know that doing so will help them attract and retain the best workers and build a productive workforce.
And although it’s politically popular to blame employers for our nation’s current health care woes, an employer mandate would do nothing to address the real culprit in our country’s health care crisis — rising costs.
Requiring businesses to purchase insurance coverage they can’t afford will do little to reduce the number of uninsured. In fact, by making the cost of labor even higher, an employer mandate may increase the number of uninsured, as companies hold off on hiring new workers — whom they’d immediately have to cover.
Congress may think an employer mandate compels businesses to do their part to pay for health reform. Unfortunately, the pay-or-play plan under consideration would drive down wages and employment, drive up the price of health care, and drive many firms out of business altogether.
Janet Trautwein is CEO of the National Association of Health Underwriters.
www.teddecorte.com
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