As part of a compromise with the Blue Dogs, Chairman Henry Waxman (D-CA) has agreed to make some changes to the health care bill being crafted in the House Energy and Commerce Committee. One facet of the compromise involves raising the small business exemption on the employer health care mandate. Under the original bill, businesses with a payroll greater than $250,000 would be charged for not providing health insurance. The compromise pushes that to $500,000 in payroll, with the exemption not completely phased out until $750,000.
Of course, the Wall Street Journal editorial board is on the march against the very idea of an employer mandate:
To understand why, consider how the Pelosi jobs tax works…A tax credit would help very small businesses adjust to the new costs, but even a firm with a handful of workers is likely to be subject to this payroll levy. As we went to press, Blue Dogs were taking credit for pushing those payroll amounts up to $500,000 and $750,0000, but those are still small employers.
As Igor Volsky explained, “in the context of comprehensive reform, an employer mandate would preserve employer coverage and keep the employer contribution in the system.” The Congressional Budget Office said that the original House bill, which includes a strong employer mandate, would “drive 9 million people off of employer-provided insurance plans but that 12 million people who do not have such coverage now would get it — a net increase of 3 million people insured through their employers.”
Furthermore, the notion that this mandate would decimate small employers is nonsense. If the compromise comes to pass, 87 percent of businesses would be completely exempt from the mandate, since they have a payroll of less than $500,000.
Actually, even before the compromise, 77 percent of businesses would have been unaffected by the mandate. The only small employers that will be affected by the full scope of the mandate are firms with few employees who are making a lot of money. And chances are, businesses of that sort already provide insurance.
This is essentially a mandate on large employers, to ensure that they can’t simply drop their coverage, sending their employees into the health insurance Exchange or the non-group market. A huge influx of formerly covered employees into the Exhange would prove costly and overwhelming, since the Exchange is intended for small business employees and the self-employed.
By covering the very largest firms with this mandate, you actually ensure that a vast majority of workers are affected, as the 13 percent of firms with a payroll larger than $500,000 employ 81 percent of the country’s workers. So in the end, the bill is not about taxing small businesses, but providing America’s workers with stable access to health insurance.