Baucus’ Free Rider Provision
I’ve raised concerns in the past about Max Baucus’ preference for a “free rider” provision instead of an employer mandate. The way an employer mandate would work is that every employer with more than such-and-such number of employees would either need to offer health insurance to its employees or else would have to pay a fee. The fee would provide the government with revenue that helps offset the cost of subsidies for the uninsured to get insurance on the individual market. If you were designing a system from scratch, instead of doing this you would have a payroll tax on all employers and use the money to offer subsidies to everyone. But since we don’t want to start from scratch, and also don’t want to disrupt people’s existing coverage, the employer mandate more-or-less accomplishes the same stuff.
Instead of that, though, what Baucus (apparently at the behest of Olympia Snowe) wants to do is just put a special fee on employers who don’t offer insurance whose employees are subsidy-eligible. Instead of something that resembles a payroll tax, this is basically a tax on employing poor people. Ezra Klein explains that this has now been tweaked in a strange way:
The employer doesn’t just pay $400 per low-income employee. He pays “$400 multiplied by the total number of employees at the firm (regardless of how many are receiving the state exchange credit).” The bill actually gives an example of how this works: Employer A has 100 employees and does not offer health-care coverage. Thirty of the employees receive subsidies on the exchange. Employer A doesn’t pay $400 x 30 employees, but $400 x 100 employees, for a total of $40,000.
Ezra calls this “one of the worst policy ideas I’ve ever seen. It creates a huge incentive to build a workforce that entirely excludes low-income workers.” Maybe. Another way of looking at it is that arguably making it $400 * X makes the plan look more like a straight-up employer mandate rather than a special tax on employing low-income individuals. Another thought is that this is going to create a lot of incentives to fiddle with corporate organization. If I employ 100 people, of whom 20 are subsidy-eligible, it’s now going to make a lot of sense to see if I can’t set up a separate firm that employs 20 people, is wholly owned by me, and contracts with a second me-owned firm that employs the other 80 people.
Also problematic is the plan’s “free rider” provision, which would require employers who do not offer health coverage to pay substantial amounts for low- and moderate-income employees who receive subsidies to buy coverage in a health insurance exchange — but not to pay anything for employees who do not get subsidies. (It also would require employers who do offer coverage to pay if some of their workers receive subsidies because the employers’ coverage is not considered affordable for them.) And by requiring employers to pay extremely large amounts for hiring individuals who receive subsidies for family coverage in the exchange, the provision would make it harder for some lower-income parents with children to find jobs. This provision also would place significant administrative burdens and costs on employers because it would be complex to administer.Their more formal analysis of the "free rider" issue is also worth reading.
So in the scenario where Baucus Corp. has a lot of low-income workers, they cost a huge amount overall because they're multiplied against the total number of workers. In the scenario where Baucus Corp. has a few low-income workers, they cost a huge amount individually because they're multiplied against the average subsidy cost. No matter how you look at it, the policy makes it profitable for employers to discriminate against hiring low-income workers.Normal employer mandate would be better.
40 Responses to “Baucus’ Free Rider Provision”
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September 16th, 2009 at 4:16 pm
Here’s an even better situation- say you employ 100 people, and no one is subsidy eligible. So you don’t have to offer insurance, but you don’t get penalized because of your care in hiring well-off employees. But then say that one of them has a spouse who loses their job. That person is now costing that employer 40k more. I don’t think they’ll be keeping that job for long.
Even better- maybe the person’s spouse lost her job due to a health problem, so the spouse doesn’t get insurance through his/her job, the employee doesn’t get it through her/his job, and now the employee is fired for costing too much in “free-rider” penalties. Welcome to America.
September 16th, 2009 at 4:16 pm
(Assuming loss of spouse’s job resulting in the employee becoming subsidy eligible due to loss of family income.)
September 16th, 2009 at 4:19 pm
The best rationale for healthcare reform is that the current ’system’ is killing American business, particularly small business. Utopian idealism about full coverage and attempting imitate what Canada and Europe are doing is rubbish and that should not be what this is about.
What Ezra says plays into the worst fears legitimate critics of healthcare reform have – namely, that the government views taxpayers as a resource to be strip mined. ‘Numbers not adding up? Just tax the hell out of employers.’ Not only is this a terrible way to look at it, but a business that employs someone without giving them health insurance is better than no business at all. And the type of business that doesn’t offer health insurance probably has ten or fewer employees, not 400 – a typical error made by someone who probably has never held a real job.
If Ezra has a hostility towards free market capitalism, he shouldn’t be in the healthcare reform debate at all.
September 16th, 2009 at 4:19 pm
What Matt’s post misses is that the employer has some say in the employee’s income. Still, I agree that this is a terrible idea. Companies should be penalized for not offering health insurance, not for the family income of certain of their employees.
September 16th, 2009 at 4:20 pm
I really only started my own firm in order to become a Human Resources executive who gets to argue with insurance companies all day about why the fact that I pay them leads me to expect them to live up to their own written policies and commitments which they do not. I really never wanted to waste any time being an Architect and am grateful to all of our elected officials for saving me from that dire fate.
God forbid that I should loose the authority to pick carriers for my employees, I’d have nothing left to do but business!
September 16th, 2009 at 4:27 pm
The best rationale for healthcare reform is that the current ’system’ is killing American business, particularly small business.
I’m not sure that’s the best rationale. There are many good ones and this is one among many. Here are a couple of other economic-only arguments:
* Workers should not get stuck in a job because they’re afraid of losing healthcare
* Potential entrepreneurs should not be afraid to start businesses because they’re afraid of losing healthcare
And there are also these good ones:
* No one should die because they can’t afford health care
* No one should go bankrupt because they get sick
What Ezra says plays into the worst fears legitimate critics of healthcare reform have – namely, that the government views taxpayers as a resource to be strip mined.
This kind of “argument” might play well on talk radio, but no one’s buying it here.
Again, this particular part of Baucus’s plan is terrible. But if we’re going to try to get universal coverage AND stick with an employer-based system, then we’ve got to do something about employers who don’t voluntarily offer coverage. Either give them more incentives or penalize the or something.
This is not a fundamental argument about free market capitalism. Please spare us.
September 16th, 2009 at 4:36 pm
The literal meaning of “utopia” is “nowhere.” Since you actually point out and concede that Canada and Europe actually exist, it’s hard to claim that universal coverage is “utopian.”
September 16th, 2009 at 4:37 pm
Wait. Who pays low income workers so little? Their employers! Matt has been right to say that Senators should not be allowed to dodge their own moral agency by passively saying “the votes aren’t there.”
Well the corporate equivalent to “it doesn’t have the votes” is “market forces.” It is a dodge. Employers shouldn’t be allowed to dodge their own moral agency for paying their workers so poorly, either. The pay scale is set by corporate bureaucrats making their best guesses what they need done and how much they need to pay for it. They shouldn’t be let off the hook for their decisions.
September 16th, 2009 at 4:46 pm
I think Ezra’s analysis makes sense at first glance, but not when you think about it in more detail.
Even if the subsidy level is only 200% of poverty, and not 300% or more (as it should be), a very large number of companies which would be affected by this policy simply wouldn’t be able to avoid employing people who would be eligible for subsidies.
Sure, large companies could move those low-paying positions to contracting agencies (such as janitorial work, for example)…but it’s the large companies which are providing health insurance and almost certainly will continue to do so. The concern is all the smaller businesses that don’t currently provide health insurance. And I think that most, but not all, of those businesses simply wouldn’t be able to eliminate their low-paying positions. A large portion of them have almost nothing but low-paying positions.
Given this, then Baucus’s proposal is, surprisingly, closer to an actual employer mandate than is only charging the fee per subsidy-eligible employee, just as Yglesias says. It certainly would generate more revenue to offset the subsidy.
However, consider that there’s a direct relationship with the level of the subsidy and how much this impacts business. Both when the legislation is written, and after when it might be altered, it provides an incentive for the “business friendly” and deficit-averse to lower the subsidy level. I suspect this is the real motivation behind Baucus’s proposal. It accomplishes several insidious goals simultaneously:
1) For any given subsidy level, it lowers the cost of reform.
2) Lower the subsidy, lower the cost of reform.
3) Lower the subsidy, lower the number of businesses who would be affected by the fees.
Each follows the other in argument. What’s behind this is the push to set the subsidy level lower, perhaps much lower, than has been previously proposed.
On the other hand, from the more “actual reform” and less “business friendly” view of things, the higher the subsidy, the better this looks. So, liberal dems should take Baucus’s proposal and run with it, except ensuring that subsidies are set to include at least up to 300% of poverty level.
September 16th, 2009 at 4:48 pm
Not only is this a terrible way to look at it, but a business that employs someone without giving them health insurance is better than no business at all.
I disagree that businesses are a good in themselves. They are good only to the extent they contribute to society. Our laws are very protective of businesses. These protections should be earned not just given as a matter of course. Business protection should not be the aim of our government.
September 16th, 2009 at 4:48 pm
* Potential entrepreneurs should not be afraid to start businesses because they’re afraid of losing healthcare
Why do Republicans hate entrepreneurs?
September 16th, 2009 at 4:50 pm
These schemes do seem structured in perverse ways. That said, I actually like the general idea of making it possible, indeed attractive, for firms to pay contributions to the subsidy pool as opposed to acting as their employees’ insurance exchange. I just don’t want the size of their contribution to be tied to whether or not they hire employees requiring subsidies (or how many).
September 16th, 2009 at 4:51 pm
Utopian idealism about full coverage and attempting imitate what Canada and Europe are doing
That’s peasant talk.
In the developed world, full coverage is quotidian. The US non-system of healthcare is dystopian, as is the political system it’s wrapped in.
September 16th, 2009 at 4:54 pm
All that said, I’d much prefer a straightforward employer mandate with fines. I think all the negatives associated with the individual mandate coupled with anemic subsidies are greatly amplified in the absence of an employer mandate (or something very close to it).
September 16th, 2009 at 5:03 pm
The score on the Baucus proposal is in! It saves $49 billion over 10 years, and even more over the long term. That means it can be done through reconciliation.
September 16th, 2009 at 5:13 pm
There’s a disjunction in your comment in that the people with incomes at the subsidy level are only a portion of all the people who have insurance via their employers.
The big problem with reform is that while the best forms reform could take would be to divorce health insurance from employment, doing so requires either that individuals pay considerably more out of their pockets for health insurance than they were through their employer’s group plan or government makes up the difference (which it would have to fund through taxation) or some combination of the two.
But all people simply paying more—or a combination of some paying more than others—are politically unacceptable. And increasing taxation to avoid this is also politically unacceptable.
The result? Attempting reform while mostly keeping an employer-based health insurance system is the only choice remaining. And keeping an employer-based health insurance system means achieving reform with a complex and confusing combination of incrementalist changes that are likely to have at least a few perverse and unpleasant consequences.
September 16th, 2009 at 5:19 pm
Al can go fuck himself through reconciliation.
September 16th, 2009 at 5:30 pm
CBO has it a bit better than revenue neutral. Now we [deficit hawks] won’t accept anything less.
September 16th, 2009 at 5:35 pm
There are njo subsidies in this bill. There are only tax rebates. This bill does not have universality, it allows hardship waivers that don’t actually get anyone medical care. This bill does not offer Guaranteed Issue, now that it’s released the loopholes around this are fairly obvious. Insurance industries allowed to limit how many people they are forced to accept, and can easily slowdown applications for the people they want to weed out.
At this point, the bill doesn’t actualy do anything but force people to buy healthcare. It doesn’t force companies to actually cover them, it forces them to, maybe, pay a bill or face a fine that is is 1/15th the fine they charge individual people.
September 16th, 2009 at 5:36 pm
I went to read the linked articles, was confused when I read Klein’s, and then came back here to see the changes.
Basically, Baucus’s scheme is terrible. It wouldn’t do what I thought it might do because of the alternative penalty that Klein didn’t include and the fact that I wrongly had the impression the $400 figure was monthly and not yearly (monthly would have put it in the same range as the monthly subsidy amount, but as a yearly number it’s not even close).
So it’s a very weak alternative to employer mandates, wouldn’t much offset the costs of the subsidies, and because Baucus is trying to set the subsidy level very low anyway it probably would result in firms shedding jobs of very low paid employees. Worse, the fee calculation includes subsidized insured dependents and so would certainly provide a strong incentive for businesses to discriminate against parents, particularly low-paid working mothers. It’s business ass-kissing and regressive.
September 16th, 2009 at 5:36 pm
Thank you Mr. Ellis @ 16.
And we shall be quite lucky if the “perverse and
unpleasant consequences” are only a few.
It is the inevitability of those
consequences and a judgment that they are too
perverse which drives a great deal of opposition to
ObamaCare, Jimmy Carter be damned.
Nobody is willing to raise taxes and pay the costs
of real reform which leaves the administration at
the power of the Powers That Be.
And the “perverse” result of that will be another
dry fuck of the middle classes.
September 16th, 2009 at 5:38 pm
Now we [shite hawks] won’t accept anything less.
Fixed your typo. Though if you won’t accept anything less than horseshit, I suppose we’ll have to oblige.
September 16th, 2009 at 5:39 pm
Soullite, you’re quite right that this is a bad bill. But I very strongly doubt that this is what will be the result of the end of the process. At this point, Democrats are negotiating with themselves—that is to say, the liberals are negotiating with the centrists. This is the centrist bill.
September 16th, 2009 at 5:39 pm
There is nothing in this bill that actually prevents Insurance industries from pulling their usual trickery, either. nothing that prevents them from ignoring test and diagnosing people with other illnesses. Nothing to prevent them from slowing down paperwork in the hopes a patient dies before they approve treatment. There is nothing here to prevent industries from pretending standard treatments are non-standard ones. There is nothing in this bill that will actually end recission. No jailtime or truly catastrophic fines, and those are probably the only thing that will truly outweight the profit motive of these scumbags.
This bill will make a few peoples lives better, a lot of peoples lives a lot worse. Good luck with that turning out awesome for you.
September 16th, 2009 at 5:40 pm
Here’s an easly solution:
Your job should not be involved with your healthcare. Making these two get even closer together is idiotic.
How about extending the tax deduction to both employees and employers for 2 years, and after that slowly remove the % the employer can deduct by 25% a year over 4 more years. Plenty of time for folks to switch to their own insurance.
I think most Americans would be happy to not be Dependant on their jobs for health insurance, if done correctly.
Use the money saved from above and $.25 gas tax increase to give poor people money to get better health care.
Makings things even more complex is going to create even more problems down the road, why not just fix it now?
September 16th, 2009 at 5:40 pm
There’s a disjunction in your comment in that the people with incomes at the subsidy level are only a portion of all the people who have insurance via their employers.
Correct. So as far as the government being involved in mandating employer contributions to health insurance funding, this would be a somewhat redistributive policy, but all the way up to the subsidy cutoff. Meanwhile, of course higher-income employees could negotiate with their employers to get enough pay to cover buying unsubsidized insurance policies through the exchanges.
I think the net result would be to increase participation in the exchanges, increase the pressure to make the subsidy cutoffs higher and more generous, and increase the pressure to make the options in the exchanges attractive even on a non-subsidized basis. All of which I view as good things.
September 16th, 2009 at 5:42 pm
I disagree that businesses are a good in themselves. They are good only to the extent they contribute to society. Our laws are very protective of businesses. These protections should be earned not just given as a matter of course. Business protection should not be the aim of our government.
Um, how does the government get money if there is no business? Does government hand out wealth after creating it? Why should businesses have to “contribute to society”, cant they just build stuff people want to buy?
September 16th, 2009 at 5:43 pm
Keith, Phrma is going to spend 150 million to push this bill. The same 150 millions they agreed upon with White House to spend on the healthcare bill. Somehow, I doubt that just happens to be a coincidence.
September 16th, 2009 at 5:43 pm
[...] and Policy Priorities Nicholas Beaudrot, Donkeylicious blog James Kwak, Baseline Scenario blog Matthew Yglesias, Think Progress blog Bob Cesca, The Huffington [...]
September 16th, 2009 at 5:53 pm
“what Baucus (apparently at the behest of Olympia Snowe) wants to do”
She is this important because. . . ?
September 16th, 2009 at 6:08 pm
Re: Workers should not get stuck in a job because they’re afraid of losing healthcare
Since 1996 this is no longer an issue, assuming people are just changing from a job with insurance to another job with insurance. Workplace group plans cannot refuse to insure someone who is already covered at their former job.
September 16th, 2009 at 6:13 pm
Well, I don’t think that would happen except perhaps in the relatively small cases of those who are represented by unions.
The employer’s portion of health insurance payments is a hidden cost of insurance that any transition away from employer-based health insurance will reveal. There’s no avoiding it. I think it should be effectively subsidized by the government one way or another. Not just for the needy, but for everyone who gets insurance via the exchanges. People like soullite will still object to having to pay a premium for health insurance; but insofar as this group will be paying about twice what similar income but-employer-subsidized-health-insurance workers pay, they have a legitimate complaint.
If you believe that workers have bargaining power to increase wages in the absence of the employer subsidizing health insurance, then you’re faced with the unavoidable fact that workers with recourse to the exchanges have less incentive and a lesser bargaining position than workers do now. Nevertheless, the trend even before the recession was for companies to stop providing health care benefits. In other words, the mere existence of reform will begin to push people from employer provided health insurance to the exchanges. Some of those workers may negotiate pay raises. Most won’t. And more and more people will be paying more out of their pocket for health insurance than they were before reform. That’s not good.
If it’s not implemented originally, I think eventually people will demand that government subsidize this now-revealed cost to those who get insurance on the exchanges.
Anyway, much—I’m sure—to soullite’s dismay, I’ll support even Baucus’s bill if that’s what emerges at the end of the day. I believe that most, if not all, of the ways in which a bad reform bill will suck will be corrected relatively quickly as a result of a backlash against it. What won’t happen is a return to a time before reform. But in the absence of reform, that time will continue indefinitely. Even a bad bill provides more hope for real reform than does no bill at all. Opinions will differ.
What I’d like to see, and realistically hope to see, is all the regulatory reforms that have been proposed included (and with teeth), a relatively high subsidy level, strong regulatory control of the exchanges, and a public option in the exchange. And from that, I think that with or without the public option, there would over time be increasing levels of subsidy for the exchanges and more people moving to them from employer-provided insurance. Eventually, we’d have a highly regulated for-profit version of Germany’s health care insurance system. With a public option, we might eventually have a government-run single-payer equivalent. With nonprofit co-ops, we could have the equivalent of Germany’s system. We’d be well on our way even with a bad bill; but let’s hope we get a good bill, even so.
September 16th, 2009 at 8:33 pm
>> Re: Workers should not get stuck in a job
>> because they’re afraid of losing healthcare
> Since 1996 this is no longer an issue, assuming
> people are just changing from a job with insurance
> to another job with insurance. Workplace group
> plans cannot refuse to insure someone who is
> already covered at their former job.
First of all, that’s a huge assumption given the number of people (particularly in the 40+ age range) who have been involuntarily converted to 1099 consultant status in the last 5 years. And of course it means no hope of opening your own business or going to work for a small startup with no insurance benefits.
But in any case, up to about 2002 both employers and insurance companies seemed to treat COBRA transitions with good faith more-or-less in the spirit originally intended. Since that time insurers and employers (both former and prospective) have become absolutely ruthless about the process and will do whatever they can to reject you, refuse claims, pre-exist the fact that you breathe, and generally make your life a living hell. Yeah, in theory there are all kinds of legal protections. In practice there is no way you as an individual can afford to sue anyone involved, least of all your new employer. And the Justice Dept is hopeless.
Cranky
September 16th, 2009 at 9:07 pm
Do any of you honestly doubt that if they try to pass this as is, Ezra Klein and Matt Yglesias and Ezra Klein will not trip over each other to praise it all to high heaven? That they will not say that this bill does everything it needs to? That, suddenly, universality and guaranteed issue will be dropped and the real key to healthcare reform will be the individual mandate itself, even without universality?
Cranky, and that’s just what will happen with any rescission or Guaranteed issue regulations. They will be followed for a little while and then completely and utterly ignored after a successful capture of the regulatory agency that oversees them.
As much fun as you right wingers seem to have in pretending those of us who are actually on the left are somehow crazy, history backs up every argument we make. Regulations really aren’t enforced in America. Fines are always lowered and rarely collected. The regulators and the industry get together and hash out a sweetheart deal. Those of you who are convinced that it will be different this time are kidding yourselves. If this country was clean enough for this plan to work, there’d be no doubt about a public option at all.
It is really up to you guys to explain to us why these reforms will be different. No screaming “SWEDEN!” or “DENMARK!”. What actually makes this bill different than Kassenbaum? You all like to claim we’re not being realistic politically, how is your position justifiable as realistic policy-wise?
September 16th, 2009 at 9:39 pm
If you believe that workers have bargaining power to increase wages in the absence of the employer subsidizing health insurance, then you’re faced with the unavoidable fact that workers with recourse to the exchanges have less incentive and a lesser bargaining position than workers do now.
How so, when you are talking about employees who would not be subsidized by the government? They have less of an incentive to bargain for employer-provided health insurance, but why would they have less of an incentive to bargain for more wages if they aren’t getting employer-subsidized health insurance? The same goes for bargaining power: if they currently have enough bargaining power to get their employers to subsidize health insurance, why would the exchanges prevent them from using that bargaining power to convert those subsidies to increased wages?
September 16th, 2009 at 10:26 pm
Actually, the part of Ezra’s post most in need of strikeout was the last paragraphs, the paen to Baucus, peer of the bi-partisan band, bravely helping King George pass both his tax cuts and his 700 billion dollar pill bill. I didn’t know Baucus was such a knight in shining armor! I see things in a whole new light now. I thought he was a boy toy of the corrupt plutocrats, with an insurance vp writing his bill to make sure that the vilest industry in America, medical insurance, gets the TARP treatment – and the cost per capita of healthcare in America goes up instead of down. But it turns out he is bipartisan – Baucus is solid. He’s for tax cuts – cause it’s your money! – and for spending increases – cause we could give a fuck. Who knew?
Is this the same Ezra Klein who used to write some liberal blog? Or is this the botched bastard of some horrible mating of Broder and Ignatius, who has slouched into the Post’s coliseum of stupid now that the endtime – at least of the Post – has come?
September 17th, 2009 at 6:43 am
“If Ezra has a hostility towards free market capitalism, he shouldn’t be in the healthcare reform debate at all.”
Excuse me? What does “free market capitalism” have to do with healthcare? Every other industrialized country has concluded that the answer is nothing and yet this kind of talk still dominates discussions here. So much so, that we have legislators and parroting the same crap.
The objective of healthcare reform should be to enhance the physical and financial well being of citizenry. Instead we have people insisting that the most important objective is to sustain the for-profit insurance industry.
If 45% of those who are insured don’t seek care because they can’t afford the co-pays, what’s the point of talking about “affordable” insurance premiums?
The free market capitalist approach is what has driven us to the edge of insolvency — as individuals, in municipal and state government, and soon as a country. We are drowning in debt and yet no one is even allowed to talk about the one solution that would actually cost less and deliver more — employer and employee contributions to a national plan that would cover every man, woman, and child. Employers or individuals who want more than the the basic plan could offer private supplementary insurance.
I want to know why I don’t have any real choice in this. I want my money to go to a plan that will deliver health care through private providers with zero participation of a for-profit company. I want the choice to contribute to a real public plan. Why do these people get deprive me of that choice? And why are others so willing to sell me down the river just to be able to say “something” was done?
September 17th, 2009 at 10:31 am
@34: Under the assumption that everything bad that could possibly happen (including those explicitly forbidden by the bill) will happen and everything good that is mandated to happen won’t happen, this bill is a bad bill.
But under those assumptions, every bill is a bad bill. Single payer looks like a terrible idea – everyone will pay higher taxes and then the government won’t actually approve their treatments or will tie them all up in paperwork for years.
Is that a fair way to evaluate a bill? Hell no. So why are you doing it? To say that “regulations won’t be enforced” is tantamount to surrendering to Reaganism — the government can’t do anything right because it’s so hopelessly corrupt and incompetent, government is the problem. That kind of hyper-pessimism leads inevitably to the conclusion that all political action is futile.
In reality, enforcing the law isn’t just a workable plan, it is the *only* workable plan. No plan will work if it isn’t actually put into effect. Government has to be made to work. But it also *can* be made to work (and has, on numerous occasions), and if you don’t believe that, you might as well give up and go seasteading or live in a cave or something.
P.S. As usual I mostly agree with Keith M Ellis (including the depressing conclusion that as flawed as this bill is, perpetuating the status quo is even worse). I would add to his point about outsourcing low-wage jobs that it won’t really help, because the contracting firms that have the low-wage workers will have to pass on the cost of insuring them/being fined for not insuring them to their contractees. The cost of low-wage labor to the people/corporations employing it will rise, whether they employ them directly or indirectly.
Hopefully the disparity between the cost of providing and the fine for not providing insurance to low-wage workers will be fixed by amendment or in conference. At least, it had better be.
An even better idea would be to key the play-or-pay provision not to the worker’s family income and situation but to *the wages of the job in question itself* — that eliminates the perverse incentives to discriminate based on workers’ family conditions (such discrimination will probably be banned, but it would be better not to provide any reason to engage in it at all and avoid the difficulties of enforcement) and means the employer’s only way out is to raise the worker’s wages above the cutoff point.
September 17th, 2009 at 2:00 pm
I wrote that part poorly and it was confusing. What I meant to compare was the group of people negotiating with their employers for health insurance with the group of people who we can expect to negotiate with their employers for raises to pay for health insurance they can get on the exchanges. The former group is more motivated than the latter, yet more and more employers have been dropping health insurance.
Employers’ position will be “I’m sorry, but times are tight and now, at least, you won’t have to go without health insurance because you can get it on the exchanges. We’d probably have dropped health insurance as a benefit even if the reform hadn’t created the exchanges.”
September 17th, 2009 at 2:14 pm
Oh, also, I should clarify something I said at the end of #32.
Germany’s system, if people here don’t know, uses about a 1,000 non-profit “collectives” which act as the health insurers. We’d call these “collectives” “coops”. They also have private, for-profit insurers that about 10% of the population uses, and which usually gets them priority care with providers. That’s an ugly part of the system, but it exists for historical reasons.
Anyway, aside from all the regulations and such on the access side which ensures that all Germans can get insurance inexpensively; the system works to control costs because it is effectively a single-payer system. The collectives are able to collectively negotiate setting system-wide payments to providers.
The coop provision in Baucus’s bill doesn’t provide or allow for this. In fact, current law probably doesn’t allow regular insurers to do this, either, if they wanted to. In Baucus’s bill, coops are allowed to collectively negotiate with providers, but they aren’t allowed to set payments that all the coops would pay to all providers. Which is a big difference.
So when I say that reform could evolve into something like Germany’s system and would be good, I mean this in every way except cost-containment. Which, um, is an important omission.
It’s also worth looking at Japan’s system (which I wouldn’t choose, but it’s interesting). They have the surprising problem of controlling costs too much, as does Great Britain. Both countries are investigating ways of putting more money into health care than they are.