Health Care Now! Goodbye Jobs!

I get so sick of hearing the President say, "If you like your current health care plan, you can keep it." It is just not true! The health care reform bills currently being debated in Congress, HR3200 and the Blue Dog compromise version, both contain some type of play-or-pay mandate. Play-or-pay requires employers to contribute 72.5 percent of the premium for individual health insurance and 65 percent of the premium for family coverage for their employees or be taxed up to 8% of each employee's wage for the Health Insurance Exchange Trust Fund. These play-or-pay mandates will have an adverse effect on employment.

The Heritage Foundation is reporting that play-or-pay mandates will put 5.2 million American workers at risk of losing their jobs or having their hours dramatically cut.

"The play-or-pay mandates in these bills, which require employers to offer health insurance to their employees or pay a tax to the federal government, will affect between 95 million and 105 million work­ers, and 509,000 to 1.4 million employers, including up to 1 million small businesses.[4] The mandates will cost businesses at least $49 billion per year and put 5.2 million low-wage workers at risk of unemploy­ment or reduced working hours. The prospect of fewer job opportunities in the future will put another 10.2 million workers at risk of slower wage growth and cuts in other benefits.[5] Up to 382,000 low-wage unskilled workers are likely to lose their jobs.[6] Fur­ther, some of the cost of the mandates will be passed on to American consumers in higher prices for goods and services--an indirect tax on savers and those with fixed incomes."

"Although the employer mandate in H.R. 3200 will result in a net increase of 3 million workers with employment-based health insurance (1.7 percent), according to the Congressional Budget Office (CBO), the mandate will cause 9 million mostly low-wage and part-time workers to lose their employment-based health insurance.[7]"

For those who may doubt that the Heritage Foundation assessment is reflective of the reality
of play-or-pay in practical application, one need only to look at Hawaii's 35 year old mandate. In a 2007 study, the Employment Policy Institute took a look at Hawaii's health care reform law and the resulting effect on employment. The report, Comparing The Effects Of Health Insurance Reform Proposals: Employer Mandates, Medicaid Expansions, and Tax Credits, concluded;

"The results of this paper suggest that while the employer mandate may provide the largest drop in the number of uninsured, it does so at the highest cost in terms of lost jobs, foregone wages, and increased employer spending."

The Charlotte Observer likewise noted that Hawaii's employer health care mandate tended to have an adverse effect on employment as a result of the employers need to offset the additional cost that the mandate imposed.

"Because Hawaii's law covers only those who work more than 20 hours per week, some companies have changed hiring practices to save money."

“ 'Naturally, everybody tries to keep their workers as part-time,' said Jack Schneider, president of J.S. Services, which handles human resources and mandated benefits for about 200 Hawaii companies. 'If you create a law, people find ways to get around it.' ”

The road to hell may be paved with good intentions, but it is also littered with the potholes of unintended consequences. However, the word 'unintended' may not apply in the case of the health care reform effort. The President, as well as the Democrats in Congress are aware, or should be aware, of the effect of their proposals in practical application.