Anthony Wright is executive director of Health Access California, the statewide health care consumer advocacy coalition. He blogs daily at the Health Access WeBlog
and is a regular contributor to the Treatment.
For health care consumers, the new bill out of the Health, Education, Labor and Pensions (HELP) Committee, chaired by Senators Kennedy and Dodd, has a lot to like. Most notably, the inclusion of a public health insurance option will help provide competition for insurers--and help prevent the worst of their abusive practices.
But while the public health insurance option has gotten much of the attention, the new HELP bill has highlighted the importance of setting a standard for employers’ contribution to their workers’ health care. It’s surprising this hasn’t gotten more attention until now. After all, well over half of Americans get coverage through their employer or that of a family member. So any reform that promises to allow people to keep their coverage--and, in fact, make it more secure--has to set some standard for employer-based coverage.
When the Congressional Budget Office (CBO) evaluated an incomplete bill without the employer requirement, it showed a high cost but with a limited number of people enrolled. When those numbers were released a few weeks ago, Republicans on the HELP Committee pounced. Citing the common mantra of health reformers that “if you like your coverage, you keep it,” Ranking Committee Member Enzi bemoaned the estimate that over 10 million workers with employer-based coverage would shift to the subsidized coverage in the exchange. Acting Chairman Dodd responded confidently, “we are going to fix that.”
The Republicans on the Committee were inadvertently arguing for a minimum employer requirement, as the best way to secure the on-the-job benefits for workers and their families. With the employer requirement, the CBO now estimates that the number of workers with employer-based coverage would stay the same and that the overall package would cover nearly all Americans.
As part of a plan financed through “shared responsibility” including individuals, government, and savings from providers, what’s a fair share for employers? The experience of myself and others with multiple health reform efforts in California suggests that the HELP bill’s assessment of $750 per uninsured worker per year is too low.
In comparison, an average employer-based plan for an average worker costs over $4,000 per year, and over $12,000 for a family. In 2003-4, the California legislature, and nearly half its voters, supported a requirement on larger employers to pay 80 percent of premium. You don’t have to support that threshold to think that $750 is low, either to secure or to expand on-the-job benefits.
Health policy experts, like Paul Fronstin at the Employee Benefit Research Institute, and others that I have consulted, seem surprised at the low bar of the HELP Committee bill. The employer assessment is crucial--of similar import to the establishment of the minimum wage a century ago--but the amount is like setting the minimum wage at $2/hour. The proposal to pay 60 percent of premium for a worker, or pay $750--which is around 36 cents an hour, or only 4 percent of payroll a worker making $19,000 a year, and much less for those with higher wages.
California Governor Arnold Schwarzenegger started his health reform in 2007 push with an employer requirement 4 percent of overall payroll. At the announcement, I had agreement from a panelist sitting next to me--Steve Burd, the CEO of Safeway, that the 4 percent was too low. Regardless of the Chamber of Commerce’s threats to “launch nukes” over any requirement on employers, the business community is hardly unified over this position. After all, many of them already provide such benefits. Many others want to, and would make the investment if it could be provided as a set percentage of their payroll, rather than the very high costs that would be entailed now.
Governor Schwarzenegger, a Republican with a near-perfect Chamber of Commerce record, eventually agreed to a sliding scale up to 6.5 percent of payroll. And he brought some of the business community with him in support. An employer requirement at an appropriate level certainly wasn’t his first choice for financing his health reform, but he saw that health reform doesn’t work without it.
To rebut this, some will point to the Massachusetts reform, with their even lower employer assessment of $295 per worker per year. But advocates in that state started with a higher assessment of up to 7 percent. When the employer requirement was lowered in the political process, the projections showed that the health reform financing would start to go out of balance in two years, as they predictably have. There has been talk of revisiting employer responsibility. Massachusetts is also an outlier--as a disproportionately high-wage state, the tight job market already protects employer-based coverage. That’s not the case in California or much of the rest of the nation.
As the Senate looks to put together the financing for their bill and paying for the crucially important subsidies that will be needed to ensure affordability and coverage for all Americans, it should look toward the House proposal, which has a minimum employer requirement of 8 percent of payroll.
It’s still less than the average of what employers who do provide coverage contribute now, but it would help working families feel more secure in the coverage they have now, and increase the likelihood of getting decent benefits at their next job. It would level the playing field for employers who do provide coverage, but often have to compete against those who don’t.
And in exchange for a requirement to do what they mostly do already, employers get a healthier, more productive workforce; policies to limit their liability to a set percentage of their payroll; major cost containment efforts; and new, affordable options to offer their workers, in an improved, easier-to-navigate market.
All stakeholders, including employers, will benefit from health reform. But only if all stakeholders, including employers, are able to do their fair share.
--Anthony Wright