Today, Wal-Mart, the largest private employer in the country wrote a letter (along with the Center for American Progress and SEIU) to the Obama administration expressing its support for the employer mandate: [Read the full letter HERE]

We are for an employer mandate which is fair and broad in its coverage, but any alternative to an employer mandate should not create barriers to hiring entry level employees….Support for a mandate also requires the strongest possible commitment to rein in health care costs. Guaranteeing cost containment is essential. One way to ensure savings was recently advanced by former Senate Majority Leaders Howard Baker, Tom Daschle and Bob Dole, “Implement pre-specified targets for spending growth and enact a “trigger” mechanism that automatically enforces reductions,” (Crossing Our Lines, Bipartisan Policy Center) President Obama suggested strengthening the role of Med Pac to help enforce spending discipline.

Wal-Mart’s support for an employer mandate is highly significant, but so is its rejection the ‘free rider provision’ — a likely component of the Senate Finance Committee’s bill — and request for a trigger to ensure the reduction of health care costs. By embracing an employer mandate now, Wal-Mart raises its profile on the issue — not to mention cleanses its tarnished reputation — and helps mold a likely component of health care reform: a requirement that every large employer provide adequate coverage or pay a certain percentage of its payroll towards financing health care for its workers.

As the nation’s largest employer of a predominately low-wage, low-skilled work force, Wal-Mart sees the free rider provision — requiring businesses to help finance coverage for workers who receive coverage through Medicaid or subsidized coverage in the soon-to-be-established Health Insurance Exchange — as a competitive disadvantage that raises costs. (The provision also discourages the hiring of lower income workers or workers with disabilities.)

The business argument for supporting reform that lowers the growth of health care costs, even with a mandate (especially when most of the large employers who would be effected by the mandate already provide coverage) is obvious. After all, progressives have long argued that all firms would benefit from the reduction in unpaid medical bills incurred by the uninsured, increased productivity through improved worker health and labor force participation, and the savings due to a reduced rate of health-care cost growth. But Wal-Mart is holding us to it. That is, if the savings from reform don’t materialize, or as David Cutler and Judy Feder argue in their new paper, “if experience falls short of expectations,” the legislation, Walmart argues, should include certain “triggers” that “automatically enforces reductions.” [Read more about the triggers HERE].

On the whole, this is a win-win for reformers. The nation’s largest employer has embraced a mechanism that enhances the existing system of employer-based coverage, levels the playing field between employers and preserves the employer contribution — an important source of funding for health care reform. In turn, it has requested that we guarantee cost reductions and steer clear of a policy that undermines low-wage workers. Let’s hope the Senate Finance Committee is listening.

The Senate Health, Education, Labor, Pensions (HELP) committee has released its much anticipated outline of the public health insurance option. Earlier this month, in an effort to find common ground with Republicans and iron out some of the most contentious issues, the committee’s ‘“Affordable Health Choices Act,” omitted language on the employer mandate and the new public option.

At the time, the New York Times had reported that the committee was considering a public plan that would reimburse providers 10 percent above Medicare rates. The outline released today doesn’t preclude that possibility, but it makes it less likely.

The new HELP framework allows the public plan to “reimburse health care providers at rates which will be no more than the average reimbursement rate paid by private plans offered through Gateways.” Under this arrangement, the new public plan would have to negotiate its own rates and play by the same rules as other private insurers within the Gateway (i.e. Exchange) — it “would follow the same rules as private plans for defining benefits, protecting consumers, and setting premiums.” What’s more, the public option would be responsible for attracting providers and would thus have to rely on competitive rates (instead of Medicare-like rates) to retain enough participants.

During its first few years of operation, the public plan would be protected from becoming a dumping ground for sicker and costlier patients. Under the outline, it would qualify for “risk corridor protections” to “offset or reclaim excessive losses and gains which could result during the start-up period (identical to those in Medicare Part D). Subsequently, its premiums would be set to make it self sufficient.”

On the whole, then, the plan follows Sen. Chuck Schumer’s (D-NY) level playing arrangement. Some of the public plan’s inherent advantages — i.e. its ability to use Medicare rates and Medicare leverage — are intentionally dulled. Still, the national option would be able, in due time, to build a strong market presence and use its size and market presence to inject competition in the insurance markets and drive down costs.