The Commonwealth Fund is estimating that about 3.4 million workers, employed by roughly 1 million small businesses, will take advantage of the new health care tax credit offered under the health care law by 2013. “Overall, 16.6 million employees of small businesses are eligible for the tax credit.”

How much would employees and employers save? The study breaks it down:

To illustrate how the tax credit might work in practice, a company with 10 or fewer workers and aver- age wages of $25,000 would be eligible for the full tax credit. Assuming that the company has a per-worker family premium of $9,435 and contributes 50 percent of the premium, it would be eligible for a tax credit of $1,651 per worker, or 35 percent of its premium contribution in the years 2010–2013, leaving it with a balance of $3,067. Beginning in 2014, the company would receive 50 percent of its premium contribution or $2,359, leaving it with a balance of $2,359. A tax-exempt organization in that year would receive a slightly lower credit (35% of its premium contribution) of $1,651 per worker.

This report will help give some context to the anecdotal accounts about small businesses applying for the credits and also lower expectations about how many firms will actually take advantage of the benefit. The study predicts a relatively modest pick up for two reasons 1) until 2014, small businesses will still face all of the barriers to entry that they do now and 2) companies that already provide coverage are more likely to apply for the credit. Conversely, encouraging small businesses to begin offering coverage will probably require a far more significant price incentive. The full credit may help small businesses begin offering insurance, but since the credit declines over time and as the size of the company decreases and the average wages of their employees goes up, many employers may be reluctant to hop into the insurance business until 2014.

Rick Scott

Maggie Mahar — whose book Money-Driven Medicine is a bible for those of us trying to figure out why Rick Scott’s Columbia/HCA paid $1.7 billion in fines to the federal government — has published a new more detailed analysis of what drove the company to acquire so many hospitals and commit such shameless Medicaid fraud during the period Scott was its CEO.

Mahar captures a company who was driven not by a desire to improve patient care or outcomes, but the need to constantly expand and acquire new properties. It focused on the price of its stock rather than the quality of its service and it was this mindset that forced Columbia/HCA to cut corners, price gauge and place the safety and health of its patients at risk:

Their goal was growth, and they believed speed was essential. Sometimes they bought a hospital just to close it down, so that it wouldn’t compete with a nearby Columbia property. Scott cared little about the needs of the communities where he bought. “His arrogance and disdain for the concern for communities, was appalling,” said Paul Torrens, MD, MPH, professor of health services management at the UCLA School of Public Health. [...]

In Ohio “Attorney General Betty Montgomery was so outraged by what she characterized as the ‘peremptory, bullying’ tactics that Columbia employed in its failed attempts to acquire Blue Cross/Blue Shield of Ohio and Massillon Community Hospital that she took the company’s Ohio chief aside and delivered a blunt threat,” Business Week reported. “Says Montgomery: I told him that if you want to do business in Ohio, just play it straight from now on. Otherwise, I will fight you in court any time, anywhere.’”

In 1997, when Lawrence Hospital, a community-owned facility in Lawrence, Kan., refused three buyout offers from Columbia, the company took an option on property nearby and sought to build a competing hospital. “‘We like to say here that they approached us in a very aggressive manner to marry them,’ Ray Davis, chairman of the hospital board, told the New York Times. ‘And when we said no, they decided they were going to kill us.’”

[...]

Ultimately, Scott epitomized those CEOs of the 1990s (Enron’s Ken Lay, et. al.) who saw their company, not as an organization that produced a product that they could be proud of–but as a stock. Share price was all. Questions about whether the company was delivering value to its customers were moot. This explains why Scott would be happy to slash nursing staff, bribe doctors to “put heads on beds” (whether or not those patients needed to be hospitalized), and lie to Medicare.

All this correlates well with today’s article about one Columbia/HCA acquisition deal gone bad and contrasts sharply with Scott’s strong defense of his tenure, all the while providing a glimpse into some of the so-called “mistakes” that he has ostensibly taken responsibility for. This isn’t just a few accounting errors or regulatory oversights, it’s an entire business mindset that’s based on short term success but and inch deep commitment.

Over at the Incidental Economist, Aaron Carroll wonders why Sen. Ron Wyden (D-OR) — a long proponent of the individual health insurance mandate — is suddenly turning against it, pushing the Oregon Health Authority to apply for a waiver from requirement. Carroll attributes this newfound position to the politics of the moment, but I suspect it also has more to do with his philosophy of “choices” — the belief that states should have the freedom to innovate and establish their own health care proposals so long as they can provide the same level of coverage to their residents.

This philosophy has left its footprints on the current health law. Wyden successfully inserted an amendment that would allow states exempt themselves from certain federal requirements by 2017 and he worked out a deal with Senate Majority Leader Harry Reid (D-NV), under which a small sliver of the population — individuals and families under 400% of the federal poverty line who receive employer-sponsored coverage and spend 8-9.8% of their income on premiums — could “convert their tax-free employer health subsidies into vouchers that they can use to choose a health insurance plan in the new health insurance exchanges.”

Wyden believes that the more choices people have, the more vibrant and competitive the market and the lower the health care premiums. Wyden’s communications director Jennifer Hoelzer told me that it’s not that Wyden rejects the mandate; he just thinks states should have the option of opting out of it if they think they can do a better job of expanding access and lowering health care costs. She says that Wyden’s state innovation amendment is actually an “antidote” to those who want to repeal the individual requirement. “If you can do just as good or better than the federal law, you can apply for a waiver from that. And if you can cover your residents without a mandate, then you can go ahead and do that,” she said. “Maybe states do stick with the mandates, maybe they don’t, but what it says that all of these federal requirements, if you can prove that you can do just as good of a job without that, the federal government wouldn’t punish you for not complying.” “The federal mandate says you can do it in X,Y,Z and this just gives us the leverage to go a different way,” she said.

So Wyden isn’t so much against the idea of the mandate as he is for the idea of choices and state innovation. But his critics claim that Wyden is overstating the breadth of his waiver. January Angeles, a health policy analyst at the Center on Policy and Budget Priorities, reminded me that Wyden’s waiver does not exempt states from reforming their health insurance markets — extending guaranteed issue and community rating — and argued that “whether or not he gets this waiver, Oregon still has to implement those market reforms.” “There is no way to implement those market reforms” without a mandate, she said. “There is just no way to make it work and have the popular elements of reform and make it work.”

Indeed, according to Sec. 1332 of the health law, Waiver For State Innovation, Wyden would only exempt states from the following requirements:

(A) Part I of subtitle D: ESTABLISHMENT OF QUALIFIED HEALTH PLAN

(B) Part II of subtitle D: ESTABLISHMENT OF QUALIFIED HEALTH PLAN

(C) Section 1402: Reduced cost-sharing for individuals enrolling in qualified health plan

(D) Sections 36B, 4980H, and 5000A of the Internal Revenue Codeestablishment of qualified health plans

States would still have to abide by the insurance market reforms in subtitles A, B, and C. Wyden’s office concedes that “if a state can’t come up with a solution that meets those reforms and all of the other cost and coverage requirements then it won’t qualify for a waiver.” Still, it insists that it’s possible to enact insurance reform without a federal coverage requirement, just like states have been able to cajole drivers to purchase auto insurance without federal assistance. “Senator Wyden wrote the state waiver provision to be purposefully unspecific so that states would be free to innovate new ideas that none of us may have thought of yet,” Hoelzer wrote in an email. “And if they can’t make it work as some are suggesting, then they won’t qualify for the waiver.”

It’s unclear if states will be able to achieve marketplace reform without a mandate and Wyden isn’t necessarily requiring them to abandon the requirement. He’s just encouraging them to adopt innovative policies that can go further in achieving the goals of health care reform.

Outgoing Minnesota governor and potential Republican presidential candidate Tim Pawlenty appeared on Fox News and Fox Business last night to defend his recent executive order prohibiting the state from applying for grants provided by the new health care law. Pawlenty’s ban could cost the state $1 billion or more in federal funds, but in his national TV tour last night, the governor compared the federal government to a drug hustler pushing its product on willing addicts:

PAWLENTY: Federal government’s acting increasingly like a financial drug dealer, handing out tastes or free samples, trying to get people addicted, further addicted. And we’ve just had it and we’re not taking the bait anymore. We’re not taking the free samples anymore. This is an executive order that says we’re sending them a strong message, but we’re also going to try to make sure the policies are for Minnesota not because some big federal bureaucracy tells us what to do.

Earlier that night on Fox Business’ The Willis Report, Pawlenty implied he didn’t believe that the grants for insurance premium review or reinsurance “make sense.” Watch a compilation:

Of course, the 97 different entities that applied for reform’s reinsurance grants can rightfully take offense to Pawlenty’s drug-dealing analogy and his dismissal of the money as nonsensical. After all, while his refusal to accept early Medicaid funding could be understood as an unwillingness to spend more state funds on the program, his decision to reject grants that require no state contribution is more difficult to comprehend. In fact, Minnesota was one of only five states to reject the federal grants for rate review.

Pawlenty is suggesting that he has a long record of refusing the federal government’s so-called financial drugs, but he recently signaled that he will accept $263 billion from the federal government to help fund the state’s Medicaid program and took additional dollars to fund abstinence-only programs. In fact, as Amanda Terkel reported yesterday, Pawlenty’s own budget instructed state agencies to apply for federal health care grants.