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.
