House Health Care Bill Imposes Employer Mandate
House Democrats unveiled sweeping health care legislation that would require nearly every employer to provide health care insurance to workers or be penalized 8% of payroll.
Under the bill, employers with payrolls exceeding $400,000 would have to provide coverage or pay the 8% penalty. Employers with payrolls between $250,000 and $400,000 a year would pay a smaller penalty, and those less than $250,000 would be exempt.
According to 2006 data, employers with between 5 and 9 workers had an average payroll of around $375,000. About half of these firms already offer employees health insurance.
A Senate bill is expected to be introduced shortly. According to the Wall Street Journal (July 2nd), the Senate bill is also likely to have an employer mandate, which would require employers to pay an annual fee of $750 for each full-time worker and $375 for each part-time worker if they didn’t cover at least 60% of their employees’ health insurance premiums. The Senate bill would exempt employers with 25 or fewer employees.
July 17th, 2009 at 10:43 am
John;
Good article in NJ Biz. I have a ton of questions on the bill;
Are Temporary Employment Agencies required to provide insurance? What about employee leasing companies? If I cover a percentage of the health care costs will I be required to cover 100%? Will an employee be forced to pay his/her share? As an employer, right now I cover individuals, husbands and wives, singles with children and families regardless (whatever the employees chooses). Will I be required to cover those lives that don’t work for me? If not, who will cover the families? Will there still be a distinction in NJ between small business and large business? Will rates be lower prior to my needing to make a decision on what plan versus penalty? My guess is that carriers won’t have any experience with the new volume of covered lives to allow them to adjust pricing immediately. If this is a national plan, will there still be state specific insurance franchises or does that need/advantage go away for the carriers?
This is going to be very interesting.
July 17th, 2009 at 12:18 pm
The House bill requires individual coverage, with the employer paying at least 72.5 of the premium; 65% for family coverage. It’s automatic enrollment unless the employee opts out. If the employee opts out, the employer pays a tax per head, so there is a big incentive for enrollment, unless it’s cheaper to pay the tax.
If an employee opts out, he or she still have to be insured. So it would be foolish to opt out, since the employee would be paying 100%.
The key to the whole reform package is cost control. This version creates a public plan, which should be cheaper than a market plan. Small business can buy the public plan for its employees, which could pool millions of people, thus eliminating the need for PEO-middle men and leasing aggragators.
So the key is lowering costs, or at least moderating the cost. Unless that can be accomplished, its another Social Security fiasco. The quesion is, can you control costs without some form of a public plan? The carriers are fearful because in the long run, a public plan would break the state-regulated monopoly. Unless this issue can be resolved, the whole thing collapses.