The Senate health care bill has gotten kudos for fiscal responsibility. The Congressional Budget Office says it would not only pay for itself, but reduce the deficit by $130 billion in the first decade–an estimated $26 billion more than the bill the House passed last month.
We’re told the bill would also “bend the curve” of rising health care costs. A new brief by the Center on Budget and Policy Priorities explains how.
But low-income people fare won’t fare so well. High on my gripes list are the employer responsibility provisions. They’re not so bad as the Senate Finance Committee’s “free rider” provision, but they’ll still put low-income workers at a disadvantage.
The “free rider” was part of the Finance Committee’s solution to situations where employers don’t offer health insurance with benefits up to a minimum standard or do offer such insurance but not at a cost low-income workers can afford.
It required them to pay a free only for employees who are eligible for subsidized coverage in the health insurance exchange and work at least 30 hours a week. This obviously gave them a huge incentive to hire only people who didn’t qualify for subsidized coverage in the health insurance exchange and/or to reduce their hours to bring them under the definition of full-time, i.e., at least 30 hours a week.
The bill the Senate may (or may not) vote on levies a fee on most employers (all except those with fewer than 50 employees) that don’t offer health insurance if they’ve got even one full-time employee who gets a premium credit in the exchange. The fee starts at $750 for each full-time employee, whether low-income or not.
Since most covered employers are likely to have at least one low-income employee, the incentive to avoid hiring more is minimized. But the incentive to convert low-wage jobs to less than full-time is still there.
There’s also a fee for employers that offer health insurance but at a cost low-income workers can’t afford, i.e., more than 10% of their income. It’s $3,000 per employee, but only for those who can go to the exchange because the employer’s plan is, for them, unaffordable. So there’s still an incentive to prefer employees at higher income levels and those covered by another family member–and another incentive to convert full-time to part-time jobs.
The House bill offers no such incentives. Employers that don’t offer health insurance that meets a minimum standard would pay fees ranging from 2% to 8% of payroll, depending on payroll size. There’s an exemption here for quite small employers–those with payrolls below $500,000. But beyond this threshold, employers must provide or otherwise contribute to adequate health insurance for all their employees. Period.
The affordability standard for employer-provided insurance is higher than under the Senate bill–12% of income instead of 10%. However, the fee is up to 8% of the employer’s average wage times the number of employees eligible to buy on the exchange. According to CBPP, this fee would generally be less than what the employer would pay to insure higher-income workers. So there’s no incentive to prefer them.
The Senate bill also does considerably less than the House bill to help low-income people afford health insurance and the out-of-pockets they’ll have to pay if they buy it. But that’s a subject for another posting.
I’d like to think that Senate Majority Leader Harry Reid did the best he could to strengthen the employer responsibility provisions without losing any of the votes he needs to get a health reform bill passed.
He still seems not to have those votes lined up. If he gets them, we can only hope that the House employer mandate or something close to it prevails in the complex negotiations that will be needed to produce a House-Senate compromise.