Senate Finance in Search of an Alternative to Employer Mandate

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"Senate Finance in Search of an Alternative to Employer Mandate"

An employer mandate is a sort of ugly kludge of a way to expand health insurance coverage, but it works (ask the CBO) and “it works” is a pretty good thing to look for in legislation. But business doesn’t like the idea, and so the Senate Finance Committee doesn’t like it either. The simple, elegant alternative to an employer mandate would be a real national health care system—people pay taxes, and in exchange they get health coverage of some sort from the government. But Finance isn’t going to do that either, so instead they’re looking at this:

On another contentious provision being considered by the group, [Senator Susan Collins (R-Maine) said, “We don’t mandate employer coverage.” But the senators do want to create incentives for employers to continue providing health benefits.

Under the legislation, millions of low- and moderate-income people could qualify for federal subsidies to help them buy insurance on their own. Under a proposal being pushed by members of the bipartisan group, if an employer does not provide health insurance to employees, it would have to pay most or all of the cost of any subsidies for which they might qualify.

Now one question that comes to mind is how is this going to work in practice? Employers know how much they pay their employees, but a given individual’s level of subsidy is going to depend on his or her household income. Employers generally don’t have access to this information. How much does your wife make? What, if anything, are you earning on the side? Presumably you’re not going to have employers try to figure this out and then cut the government a check. But that means you’re going to need a new fairly complicated set of administrative tasks for the government.

There’s also the question of how you apportion the fee. What if an individual has multiple employers? Or a two-earner household? Or if one (or both) members of the household has worked part-time at some point during the year? These are potentially obstacles you could overcome, but it sounds pretty fuzzy to me. That said, at this point the details probably matter less than moving the process forward. Paul Starr told me “this is basically a terrible idea, but if it allows the bill to get out of Finance, it may have served a useful role.” And that, I think, is pretty much the state of things.

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