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NRO’s health-care blog.

The Baucus Plan’s Regressive Employer Mandate



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Let’s give the bipartisan “group of six” senators — Finance Committee Chairman Max Baucus and five of his committee colleagues — their due.  More than any others, they are responsible for the likely derailment of the House’s massive health-care overreach.

 

Rank-and-file House Democrats — and not just the Blue Dogs — are loathe to vote for a $1.5 trillion spending increase, $800 billion in tax increases, costly mandates on businesses and individuals, and an increase in the federal budget deficit of $239 billion over the first decade (and much more in the years following) if Senate Democrats are going to go in an entirely different direction.  Especially not after the “cap and tax” vote, which is going to haunt House Democrats all the way until November 2010.  House Speaker Nancy Pelosi as much as admitted that many in her caucus are not going to stick their necks out again when she said last night, “We’re waiting to see what the Senate will do.”

 

While putting up a major roadblock to further proceedings in the House is certainly a praiseworthy accomplishment, that’s about the only good thing that’s likely to come out of what is being worked on by the bipartisan group behind closed doors in the Senate, at least as understood from press accounts of the emerging “Baucus plan.” 

 

On the surface, there is a sense that Sen. Baucus and his colleagues are pursuing a more sensible approach, sensitive to economic concerns and more aggressive on “bending the cost-curve.”  But that’s really a false impression.  At its core, the Baucus plan contains the same elements that make the House bill flawed and the first step toward a full governmental takeover of American health-care.

 

It all starts with the Democratic insistence on “universal coverage.”  With that as the non-negotiable goal, the Baucus plan goes down the very same road as the House bill, with costly and regressive employer and individual mandates which essentially force tens of millions of people to sign up with a plan offered at the workplace, whether they want to or not. 

 

Today’s news coverage is filled with stories indicating that the group of six has apparently agreed not to impose a mandate on employers, opting instead to impose a “free rider tax” on firms whose workers end up getting subsidized coverage in the so-called “exchanges.”

 

But this is a distinction without a difference.  Businesses not offering insurance today would still be forced to pay a hefty fine for all of their workers who got newly subsidized insurance through the so-called “exchanges.”  That’s the exact same concept behind the House’s “pay or play” employer mandate.  Employers either get their workers into job-based plans — or else.   How is that not a mandate?  Yes, there may be more flexibility for firms regarding what they actually have to provide in the Baucus plan.  And because workers above 300 percent of the poverty line won’t be eligible for subsidization, their employers may not have to pay a fine for not offering insurance to them.  But the reality is that just about every firm has some low wage workers on their payroll, which means the vast majority of employers will have to organize and pay for insurance for all of their employees to avoid getting fined for those who might end up in the federal subsidy program.

 

Of course, what has not been mentioned enough is how regressive this all is.  Employers don’t “pay for” health insurance.  In competitive labor markets, they reduce what they pay out in cash by the premiums they must pay for health insurance.  In other words, it’s always the workers who pay for job-based health plan.  In both the House bill and the Baucus plan, tens of millions of low and middle income workers will be forced to sign up for employer-organized insurance, with no additional help from the government.  That will mean large pay cuts as uninsured families are forced to pay expensive premiums they don’t today.  That’s the way the authors of these bills are able to say they are “covering everybody” for “only” $1 trillion.  Indeed, the health-care bills under consideration in Congress — including the Baucus plan — would cost much, much more if the Democratic sponsors of them weren’t so willing to make the very workers they say they represent pay massive and regressive hidden taxes.   



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