Should employers be required to offer health insurance?

WASHINGTON — Requiring employers to offer most workers health insurance has long been seen as a crucial piece of Democratic efforts to overhaul the nation's health care system, but legislation that the Senate's expected to consider soon is unlikely to include any such mandate.

Instead, larger employers would have to pay fees of as much as $750 per worker to help any employee who needed government help to purchase a policy. Most individuals would have to buy coverage, and if they didn't, they too would face penalties.

The health insurance overhaul bills that the House of Representatives and the Senate Health Committee passed included employer mandates, but the Senate Finance Committee's version did not. Senate Democratic leaders are trying to merge the Finance and Health committees' bills into one measure for floor debate this week. Odds are that in the effort to get a bill that can pass, they'll offer a compromise along the Finance Committee's lines.

The struggle over the employer mandate is likely to be a textbook battle over how much government should involve itself in private-sector employee policies.

Business groups are adamant that the cost will be high.

"This will result in job loss and lower wages, reduce flexibility and choice, and raise the cost of providing benefits to employers," said Bruce Josten, the executive vice president for government affairs at the U.S. Chamber of Commerce, speaking after the House approved the mandate Nov. 7.

The mandate would cost the economy millions of jobs, warned the National Federation of Independent Business, the small-business lobby. It would mean "higher prices, fewer new store openings, limited store hours and services, as well as diminished tax revenues," the National Retail Federation said.

Businesses were less certain about the expected high-penalty proposal; the chamber won't take a position until it sees the proposal in writing. At the National Federation of Independent Business, Amanda Austin, the director of federal public policy, said: "Small employers are concerned about anything that increases the cost of doing business."

So far, voices supporting the mandate have been stronger, getting a boost last summer when Wal-Mart, the nation's biggest private employer, joined the Service Employees International Union and the liberal Center for American Progress, a policy-research center with close ties to the White House, in writing a letter of support for the plan.

Leslie Dach, a Wal-Mart executive vice president, said the choice to support a mandate must be tied to legislation "that will reduce health costs and dramatically improve the value we get for our health care dollar."

Liberals see the mandate as "an essential component of health care reform ... necessary to ensure that firms do not drop coverage in substantial numbers and shift costs to taxpayers," wrote Robert Greenstein and Judith Solomon of the Center for Budget and Policy Priorities, a liberal research group.

About 159 million Americans are expected to get coverage from employer-provided insurance this year, according to the Kaiser Family Foundation. Average premiums are $4,824 for single policies, essentially unchanged from last year, and $13,375 for families, whose policies cost about 5 percent more than last year. On average, single workers pay about $779 of that amount, while families pay $3,515.

The House bill would require employers to offer coverage to workers and contribute at least 72.5 percent of the premium cost for singles and 65 percent for families. They would help pay for the lowest-cost plan that meets the "essential benefits" package that the new health care system would offer.

Most employers that didn't comply would pay penalties of 8 percent of their payrolls.

The Senate Health Committee version also would require employers to offer coverage, while contributing at least 60 percent of the premium cost. For those who aren't offered coverage, the employer would have to pay $750 for each uninsured full-time employee and $375 for each uninsured part-time employee.

The Senate Finance Committee, more dominated by moderates, has no employer mandate, but would assess a penalty on larger employers that don't offer coverage to employees who are eligible for federal aid and who buy coverage through the new health exchange, or marketplace, that the legislation would establish.

Whether mandates or big penalties ultimately would chill hiring, or spur it, is unclear.

The Congressional Budget Office said in a July report that "although employers directly pay most of the costs of their workers' health insurance, the available evidence indicates that active workers — as a group — ultimately bear those costs."

To U.S. Chamber of Commerce officials, that suggests mandating that employers pay a percentage of costs ultimately will cost the consumer more, and perhaps make employers reluctant to hire more workers.

However, Elizabeth Carpenter, the associate policy director of the Health Policy Program at the New America Foundation, a center-left research group, thinks that fears of layoffs and reluctant employers are overblown.

"Large firms want to offer health care coverage," she said. "It's a competitive advantage for them."


Congressional Budget Office study

Kaiser Family Foundation study of employer-provided coverage

National Federal of Independent Business position paper

Wal-Mart statement on employer mandate

Side by side comparison of health care bills


Republicans hope for influence in Senate health debate

Not so fast: House health care vote is just the first step

Americans cutting back on health care to save money

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