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Employer Mandate on the Chopping Block

January 13, 2010 - by Donny Shaw

These reports that the House’s mandate that most businesses provide their employees with insurance will be dropped from the final health care bill are a pretty big deal. If the rumors are accurate, the final bill will probably go with the Senate’s “free rider” provision, which Ezra Klein has called “the worst policy in the world” and that I have said “could lead to massive job discrimination.”

Here’s how the Senate provision works:

Businesses would not be required to provide health insurance. Instead, employers with 50 employees or more would have to pay a penalty for each employee that purchases insurance on the individual market with the help of government subsidies. Individuals with family incomes below a certain percentage of the Federal Poverty Level (exact % yet to be determined) would be eligible for subsidies. Employers would not have to pay a penalty for employees who purchase insurance on the individual market and don’t use subsidies because their family makes too much money to qualify.

“Employers would have strong incentives to tilt hiring toward people who have a spouse with a good income (or have health coverage through a family member), teenagers whose parents make a decent living, and people without children (since the eligibility limit for the subsidies in the new health insurance exchanges will increase with family size),” the Center for Budget and Policy Priorities warned in an article when the provision first appeared last October. “Low-income women with children in one-earner families would be particularly disadvantaged.”

Furthermore, Jon Walker at FDL explains that the decision to go with the Senate provision over the House’s employer mandate to provide insurance will result in millions more uninsured and with worse insurance coverage, as well as $100 billion or so less in revenue for the federal government.

So, why go with the Senate provision over the House’s? The business lobby doesn’t like the employer mandate and (thus) it probably doesn’t have the support of the moderate Senate Democrats that will be needed to break a Republican filibuster.

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