NFIB Back To Fear-Mongering About Employer Mandate

nfibmyer.jpgDuring President Clinton’s failed effort to reform the health care system, the National Federation of Independent Businesses (NFIB) misrepresented Clinton’s employer mandate as a crushing financial burden that would cost thousands of jobs. The organization dispatched a constant stream of “Fax Alerts” and “Action Alerts” to its tens of thousands of small-business owners and published hundreds of anti-mandate editorials in local newspapers.

Fifteen years later, as this President prepares his own health care initiatives, the NFIB is back to its old play book. Last week, the group released two studies showing that an employer health insurance mandate would “cause 1.6 million jobs to disappear (66% from small businesses) and would cause U.S. real GDP to contract by approximately $200 billion“:

Employer mandates, the paper explains, ultimately reduce the number of jobs and pass costs along to the employees who are the alleged beneficiaries of the mandates. The mandates also impede business investment and effectively impose regressive taxes on both employees and owners of small businesses.

Progressives see the employer mandate as one way of building comprehensive reform and moving the country towards universal coverage — without fundamentally disrupting the health system. Since some 60 percent of Americans already receive health insurance from their employers, requiring all large firms to insure their employees could significantly reduce the number of uninsured, guarantee continuity of coverage, and spread the cost of insurance across different payers (the government, employers, and the individual).

In April 2006, this theory of “shared responsibility” was put to the test. Massachusetts adopted comprehensive health care reform and required employers with more than ten employees to either set up a Section 125 plan and offer a “fair and reasonable” contribution for their employees’ coverage, or “pay an annual ‘fair share’ contribution of $295 per employee.”

Now, if we’re to believe the NFIB studies, employers should have passed the costs of health insurance to consumers, reduced wages, or fired lots of people. Instead, the great majority of Massachusetts businesses embraced health reform:

Few firms reported making changes as a result of health reform.

– Firms reported making few changes in cost sharing or in offering more plans are a result of the mandate.

– Employer coverage increased by five percentage points.

– Massachusetts employers were less likely than employers nationally to terminate or restrict eligibility for health benefits.

These most recent NFIB studies, like their historical counterparts, have already made their way into local newspapers. And while their conclusions are predictable, their methodologies are suspect. The NFIB model assumes the mandate applies to small businesses despite Obama’s campaign promise to the contrary, inflates the employer contribution to 50 percent of the cost of insurance (compared to the Massachusetts mandate of $300), and relies on faulty premium growth projections (premiums are expected to slow as a result of universal coverage).

All of this is a cautionary tale. NFIB is going for a repeat performance of 1993 and it’s up to us to call them on it.