President Obama has made a point of linking health reform to economic recovery. He’s right to draw the connection – bringing down healthcare costs could shore up family budgets that have been stretched thin by the high price of medical care, but one of the Democrats’ major reform proposals would actually make it harder for America to dig out of the recession.
The “pay or play” mandate – which would compel employers to either provide health insurance or pay a stiff penalty – would cripple businesses and cause many Americans to lose their jobs.
Under the plan favored by President Obama and Senate Finance Chair Max Baucus (D-Montana), businesses with 50 or more employees that don’t provide health coverage to all their workers would be forced to pay a fee for each uncovered employee.
House Democrats seek to force firms with annual payrolls of $500,000 or more to cover a substantial portion of workers’ insurance premiums. If a business decides against offering insurance to its employees, it would have to pay a tax of between two and eight percent of its employees’ wages.
Under both proposals, employer-sponsored health plans would have to meet federal standards for minimum benefits, co-pays, deductibles and the like – even if an employee wanted a less expensive, less comprehensive policy. Workers would face far fewer choices of plans.
Burdening already-suffering businesses with expensive new healthcare obligations will have disastrous consequences for the economy.
The National Federation of Independent Business estimates that an employer mandate would cause the economy to shed 1.6 million jobs within the first five years.
Despite soaring costs, most employers already provide health benefits to their employees without being bullied to do so. Many have access to health coverage through their employer but can’t afford to pay their share of the premium.
Businesses that don’t provide coverage usually simply can’t afford to. Requiring them to pay for benefits threatens their very livelihood. And it will do little to reduce the number of uninsured.