The American Spectator : The Spectacle Blog : How Democrats' Health Care Bill Will Punish Businesses, Trigger Unemployment

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The Spectacle Blog

How Democrats' Health Care Bill Will Punish Businesses, Trigger Unemployment

By Philip Klein on 10.30.09 @ 10:55AM

One of the most onerous aspects of the House Democrats' health care legislation is the employer mandate, which would tax employers who do not offer health insurance to their workers. Not only does the proposal impose new costs on employers, but a whole new layer of red tape, both of which would undoubtedly lead to job losses and lower wages. But I thought it would be worth taking the time to walk everybody through just how onerous the requirements are in this particular provision, which starts being described on page 268 of the 1,990 page bill, under the heading: "Subtitle B -- Employer Responsibility."

Under the provision, employers would have to offer every employee "qualified" health insurance coverage. The type of insurance that is considered "qualified" will be determined by the Health Choices Commissioner, a new post that will be filled by the President and confirmed by the Senate. The Health Choice Commissioner, given many responsibilities throughout the legislation, would head up the newly-created Health Choices Administration. If a worker declines coverage but otherwise obtains insurance through the government-run insurance exchange, the employer will owe money to the government.

In order to prove that they're complying with the new mandate, employers must submit whatever information that the Health Choices Commissioner requests, and the information must also be provided to the Secretary of Labor, the Secretary of the Treasury, and the Secretary of Health and Human Services.

For full-time workers, business will have to contribute at least 72.5 percent toward individual health insurance policies, and 65 percent for family policies. For part-time workers, the required percentage would be based on a proportion of how many hours they worked relative to the hours worked by a full-time employee. The exact proportion would be determined, once again, by the Health Choices Commissioner, in conjunction with the Secretary of Labor, the Secretary of the Treasury, and the Secretary of Health and Human Services.

Any employer with a total annual payroll of over $500,000 that does not meet these requirements will be subject to a new tax, which reaches as high as 8 percent once payroll reaches over $750,000.

The National Federation of Independent Business has estimated that an employer mandate would cost 1.6 million jobs over the first five years, and cut GDP by $200 billion. Whether or not you choose to believe that estimate, it's clear that taken together, the provision would make it far more costly for businesses to hire new workers and maintain current staffing levels, by raising the price of labor as well as the regulatory burden. Basic economics tells us that if you raise the price of a good or service, then people will purchase less of it. In this case, rising prices for labor will mean lost jobs and lower wages. While the bill itself specifies that businesses cannot cut wages to comply with the mandate, this doesn't take into account that businesses could simply offer lower raises to their workers over time. The legislation will particularly hit businesses hard that are highly dependent on part-time or seasonal workers. All I know is that if this bill passes, I'd hate to be the owner of a restaurant business.

View all comments (13) | Leave a comment

Ron Evans| 10.30.09 @ 11:10AM

Mr. Klein,
Interesting post. What do the 72.5 and 65 percent employer contributions represent? Is that towards the employee's plan?

Willard Gatzke| 10.30.09 @ 11:49AM

I have two questions for what they are worth.

1) Why is health insurance provided by employers?
That only drives up the cost of health care. As an employee, if I get sick or injured "I want the best care possible. I don't care what it costs, I am not paying for it, my boss is". Not really accurate but it is a perception held by many. If people in general knew exactly what they were getting and how much they were paying for it, prices wouldn't be as high as they are. People would refuse to pay them, and look for alternatives. There is no real competition in the medical field.

2.) Why is there no debate on reducing the cost of health care? The fact is that we pay almost 2X what other industrialized nations pay for service that is rated only 37th in the world. Why?
Radical changes are needed. They won't be forthcoming as long the wants and needs of those deriving profit from the current system are held in higher esteem then the wants and needs of the sick and injured.

Flee| 10.30.09 @ 4:20PM

Willard, There are plans available that provide an answer to your first question:Consumer Driven Health Plans or High Deductible Health Plans. When used in conjunction with a Health Savings Account the participant puts aside an amount of their choosing each year to cover most of their deductible on a pre-tax basis. This is a clear motivation to choose whether or not you need to visit the doctor quite as often as you did under say an HMO. When you pay small premiums that will cover you for catastrophic ailments and cover the rest yourself, you will see the benefits. Our President and Congress feel this is too much to ask of the people. Taking responsibility for yourself was never high on their priority list. Payback to their supporters is job #1. As far as the cost, whenever any service is subsidized it will naturally rise. Housing, food, fuel, education have all risen in cost as the govt inserted subsidies into the system. The economics of the choice are pretty clear even for a simple pension and benefits manager like me.

Bob| 10.30.09 @ 12:43PM

Philip, have you ever actually run a small business? If you did, you'd understand that there are offsetting costs that makes this less onerous. Initially, health insurance was offered to keep salaries lower. This is still the case. If a small employer was forced to offer health insurance, they would also keep salaries lower and increase the proportion paid by the employee. In the final analysis, there wouldn't be much difference in their cost structure.

Furthermore, you make the assumption that increased costs would lessen business. However, most small businesses compete for domestic business. Restaurants compete with other restaurants in their neighborhood. As any real business economist knows, raising prices by a small amount will not effect business if ALL of your competition must also raise prices. We see this all of the time in the cost of rising commodities which affect competitive businesses equally. So your assumption is clearly wrong.

This doesn't mean I like the bill -- I think it stinks because it doesn't really address the cost issue substantially in the areas of lawsuits and opening up competition.

As I've said over the past several months, I don't like the public option, but not on ideological grounds. After having been an insurance executive, I can tell you that it just won't work because the cost of the public insurance will be higher than that of private companies. Why? Because the insurance census of the public group will be higher in age and have more health problems. Now it seems, the CBO agrees with me in their latest incarnation. In fact, the public option will not be successful in reducing health care costs.

Nick| 10.30.09 @ 2:24PM

Mr. Klein,

Don't waste your time with 3/5 Bob.

In case you didn't know, until recently (last June), 3/5 Bob thought that blacks had 3/5 of a vote under the U.S. Constitution, as originally written.

He also doesn't know when biological HUMAN life begins because he is not sure when "ensoulment" takes place.

Hey 3/5 Bob, here's my response to your question the other day:

Oh, 3/5 Bob. (sigh)

When you stick your glass jaw out there, you know I'm going to slap it.

"[...] why don't you consider a sperm or egg human life?????"

Umm, because they are not. You may know how to spin economic data, but you obviously know nothing about basic human biology. How can something that doesn't have 46 chromosomes be human life?

The human sperm has 23 chromosomes from the father. The human oocyte (egg is not a scientific term) has 23 chromosomes from the mother. When the two combine, a completely new human being with 46 chromosomes (just like you) is created, biologically. He/she has their own DNA, half from the father and half from the mother.

When the soul is implanted is a THEOLOGICAL discussion. Not a scientific one. Stick to science 3/5 Bob.

It is you who doesn't seem to know what "human life is." Which is why you are willing to kill unborn babies (fetus in Latin) and try to claim ignorance on when "life begins."

Which is the really scary part. You pseudointellectuals say you don't know when, EXACTLY, human life begins. This means you are perfectly fine with the idea that some humans are going to be killed during an abortion.

Because you don't have the intellectual curiosity to actually find out when life begins.

But on the off chance you have changed (not likely) and have the guts, I dare you to read this article:

http://www.lifeissues.net/writ.....egin1.html

Bob| 10.30.09 @ 2:44PM

Well, Nick, spreading lies about me again without addressing the issue. Your attempts to discredit me may make YOU feel better, but will not work with people who actually utilize their gray matter. Since you don't have the intelligence to respond to the subject matter at hand, I think people will see you as the fraud you are....

Your "scientific" definition of human life is quite limited. You believe that a one day old group of a couple of cells is "human life". I would agree that it has the POTENTIAL to be a human life, but cannot walk, think, breathe, etc. Your definition is thus not scientific, but simply a religious belief. In the same manner, any sperm or egg has the POTENTIAL to be a human life. Thus, YOU are the one who is making a THEOLOGICAL argument.

Your limited view of science and logic is thus noted.

And for the record, the 3/5th reference related to a discussion of original intent of the Constitution and why its context must change over time, not voting rights. But again, that's a discussion you don't want to have.

Nick| 10.30.09 @ 3:39PM

3/5 Bob,

"[...] but cannot walk, think, breathe, etc."

So paraplegics, people on ventilators, and people like you (who can't think) don't have the right to life either?What an arbitrary, and more importantly obtuse definition of human life.

I see you couldn't get through all the science in the link I provided, huh?

And here is 3/5 Bob's exchange with Richard Baker on the Constitution:

http://spectator.org/archives/.....et-serious

"Bob| 6.13.09 @ 11:30AM
Baker, you are right. The nature of human behavior hasn't changed. Let's bring back slavery and take the vote away from women. After all, women should be barefoot and pregnant, right? These things are, indeed, self-evident. I ESPECIALLY WANT TO BRING BACK THE PROVISION THAT GIVES BLACKS ONLY 3/5THS OF A VOTE. That will reduce the impact of minorities on Republican success."
Mr. Baker responded to your stupidity:
"Richard Baker| 6.13.09 @ 5:25PM
Bob:
If you don't know why 3/5 is in the Constitution. please don't embarrass yourself."
You countered with more ignorance and inanity, Bob:
"Bob| 6.13.09 @ 6:20PM
Richard -- so you think it was right to count slaves as 3/5th even if it was for apportionment purposes? How can you justify that under ANY circumstances? Do you have any morality?"

Nick| 10.31.09 @ 1:10PM

Hey 3/5 Bob,

DID YOU HEAR?

Dede "RINO" Scozzafava dropped out of the NY-23rd race! TEE-HEE!

Happy Holloween!

Tim| 10.30.09 @ 12:45PM

Unemployed people tend to vote for Democrats. To use a popular phrase well on the way to cliche status: "It's not a bug, it's a feature."

Babette Hogan| 10.31.09 @ 1:30AM

Healthcare Insurance needs reforming. Unfortunately, the game of politics between industry and government is leading us down an erroneous path.

I'm an entrepreneur and so is my husband. We are living the American dream and someday may have cause to celebrate. I like many who live independent contractor's lives, do not live under the umbrella of a corporation or sm to med business. And for our support of the American way, we have to pay VERY steep healthcare insurance premiums.

I think one of the best things we could do to support entrepreneurship and free enterprise is to get basic healthcare covered. Free up all the workers who are unnecessarily loyal to companies just for the health insurance and get everyone covered under a medicare system. If you want more fancy coverage, you can invest in it. But for the rest of us, who think getting the basics covered is just enough, let the competition begin.

Think of the imaginative power that could be unleashed!

Of course there are other means of controlling lots of costs. I still am surprised at how much the federal govt got charged for my father's walker - $150!! I could have gotten the same one at the drugstore for $60. Then, they don't even let the equipment be recycled. How stupid and wasteful is that. Conservative? NOT.

Nick| 10.31.09 @ 1:40AM

Mrs. Hogan,

Wanting to get everyone covered under a medicare system. Conservative? NOT.

Niel| 11.5.09 @ 8:28PM

Here is my 2 cents
- Providing the coverage for more sick people and older people at lower cost is only going to increase the shift the expense to healthy people and employers. It is not a reform.
- Nobody talks about how to reduce the adminstrative costs(Have a common centralized IT platform, which will enable to see all the tests,medical treatments, done by various clinics,hospitals on patient by entering SSN.This is most probably covered in this bill or stimulus bill.)
2) Reduce liability costs for doctors.(Need a special bill for this)
3) Relax immigration rules to allow more talented doctors and medical professionals from abroad to come to America.(Hopefuly this can be done as the part of immigration reform)
4) Fund the Research to bring the cost of expensive treatements and medicines.
5) Fund the research in the field of robotics and Internet to provide medical services at home over the internet in a cheaper, secured and accurate way.

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