Skip to comments.Senate eyes 25-employee threshold for health mandate
Posted on 07/13/2009 8:37:15 AM PDT by RightFighter
Businesses with 25 employees or more would be required to offer health insurance or pay $750 a year per full-time worker to the federal government, under health care reform legislation being considered in the Senate.
A "play or pay" employer mandate has been looming for months, but Democrats on the Senate Health, Education, Labor and Pensions Committee finally defined how small a business would need to be in order to be exempted from the requirement.
Most business groups oppose requiring employers to provide health care or pay a fee to the government, even if there is an exemption for small businesses. They contend it would kill jobs and hurt businesses that are struggling to survive in a tough economy. Plus, they say the mandate would do nothing to address health care's underlying problem: It costs too much. Reduce the price of health insurance, they argue, and more businesses would provide it.
Employer responsibility under Senate legislation Employers who don't offer coverage to full-time workers would be assessed $750 a year for each employee Employers who don't offer coverage to part-time workers would be assessed $375 a year for each employee Employers must pay at least 60 percent of their employees' premiums to avoid the assessment Firms with fewer than 25 employees would be exempt from the assessment Source: Senate Health, Education, Labor and Pensions Committee
Lynn Schurman, owner of Cold Spring Bakery in Cold Spring, Minn., would welcome an employer mandate, however. She has about 60 full-time and part-time employees, and is struggling to continue to provide health insurance coverage to them.
"It's part of my value system -- I want to treat employees fairly," Schurman said.
Her business pays about $100,000 a year for health insurance, she said. Competitors that don't cover their employees get an unfair advantage, she said.
"They should have some responsibility to provide insurance to their employees also," she said.
Schurman recently traveled to Washington, D.C., to talk to members of Congress about the need for health care reform. She is a member of the Main Street Alliance, a coalition of small business owners that supports giving individuals and small employers the option of getting health insurance through a government-run plan. This would help reduce costs by providing competition to private insurers, the alliance contends.
Alliance member Deanne Anderson, owner of Waterstone Spa in Ashland, Ore., agrees on the need for a public plan, but she has "mixed feelings" about an employer mandate. Her business would be exempt from the mandate in the Senate HELP Committee bill, but she said even businesses with more than 25 employees often can't afford health insurance or a $750-per-worker assessment.
"I really would feel sad to think that some businesses might go under after years of hard work, struggling to stay alive in this economy, because they were mandated to do something that they really can't afford to do," Anderson said.
Mandate really about revenue?
About 90 percent of businesses with 25 or more workers provided health insurance in 2008, according to a study conducted by the Kaiser Family Foundation and the Health Research & Educational Trust.
The coverage rate dropped to 78 percent for businesses with 10 to 24 employees, and 49 percent for firms with three to nine employees. So most of the businesses that don't currently provide insurance would be exempt from the Senate HELP Committee's "play or pay" mandate. The Congressional Budget Office concluded the bill would have little impact on the number of Americans who receive insurance through their employer.
An employer mandate isn't about expanding coverage, said Neil Trautwein, vice president and employee benefits policy counsel for the National Retail Federation.
"I think it's about raising revenues," he said.
He fears many members of Congress want employers to pay for health insurance even if their workers get it somewhere else.
Massachusetts collected a lot less revenue than it expected when it imposed a $295-per-employee tax on businesses that don't provide adequate health insurance, said Jon Hurst, president of the Retailers Association of Massachusetts. (Businesses with 10 or fewer full-time employees were exempt from the state's "play or pay" requirement.)
The response by state officials was to propose increasing the coverage requirements for businesses in order to generate more tax revenue, Hurst said.
Costs went up in Massachusetts
The biggest problem with the Massachusetts health care reform effort, however, was that it did nothing to lower the cost of health insurance for small employers.
"Small employers have seen nothing but double-digit increases since the law went into place," Hurst said.
Instead of focusing on affordable coverage, Congress is considering requirements -- such as lower annual deductibles -- that would make health insurance more expensive, said Amanda Austin, director of federal public policy, Senate, at the National Federation of Independent Business.
NFIB supports market reforms to make insurance more affordable, but not at the price of an employer mandate.
"We still believe it's a job killer and it will absolutely harm businesses," Austin said.
Trautwein said there are still "faint embers of hope for fair and reasonable comprehensive reform," but the National Retail Federation is "quickly coming to the view that we're going to have to fight the end product in the end."
"We're really disappointed," he said.
And people wonder why conservatives are against the so-called "public option." How many employers are going to just give away $55,000 per year or more when there is another option available for their employees? It doesn't take a rocket scientist to figure this out.
Well, that's the plan. We'll see if it works.
In other words, we will take it from you at gunpoint.
Employers started paying for health insurance for two reasons..wage control and labor shortages. If we didn’t have 12 million or more illegals in the country..maybe we would have a labor shortage and business’s would have to compete for labor and improve wages and benefits. A business who didn’t couldn’t get workers.
Many employers will just pay the fine and drop their plans..since it is cheaper. No shortage of semiskilled and unskilled workers right now.
Good grief....I pay more than $750 a year for Medicare and I gave they had a sh**load of my money to start with. Makes no sense that a working person would pay less than someone on SS...
What a great way to keep small businesses from expanding beyond 25 employees.
“Businesses with 25 employees or more would be required to offer health insurance or pay $750 a year per full-time worker to the federal government, under health care reform legislation being considered in the Senate.”
All I gotta do is pay $750 per year for each employee and I’m off the hook for health insurance?? Yippee!! I pay nearly that much PER MONTH per worker now!
Or, laying off a few employees so as to have fewer than 25.
Many companies would jump at the chance to only pay an outlay of $750 year for their employees health insurance. I expect a lot of companies will cancel existing health insurance, pay the government their $750, and tell the employee to go buy their health insurance from the federal government. The problem is it will cost the worker a whole lot of money to make up the difference, since their company group rates will no longer be available.
First of all it’s illegal for the government to require businesses to pay for insurance.
Second it will mean the end of many businesses.
Third, if you work at a company with 26 employees, start looking for another job.
Fourth, if you apply for a job at a company with 24 employees, forget about it.
Fifth, the “25” will soon be 15, then 10, then 5.
‘Progressives’ can’t do math. Or can they? Is this a ‘Cloward Piven Stragety’ to cause the collapse of the system?
More government intervention into small business. ‘When you make a deal with the devil, YOU are the junior partner.’
I guess I’m going to have to figure out how to get my employee numbers below 25 just to stay independent.
Can anyone say: Government mandated extortion?
How many employees do you have again?
I’ve met with plenty of employers who feel the same way.
If the employer/owner supports Obama, they seem to feel it is their way of “supporting his plan.”
I suspect plenty of these employers will set up ways to cover their own personal medical expenses and options, while they throw their employees into the Obama experiment.
The 750 per year will soon become 1,000 “we didn’t know it would cost so much” then 2,500, then 4,000.
Vintage Hillary Clinton - 1994
When told the (health) plan could bankrupt small businesses, Mrs. Clinton sighed, "I can't be responsible for every undercapitalized small business in America."
Also, when a woman complained that she didn't want to get shoved into a (health) plan not of her choosing, the first lady lectured, "It's time to put the common good, the national interest, ahead of individuals."
Democrats could care less about the small business men and women of this country. Hence the reason why there was no business stimulus to come out of this Obamination of a "stimulus" bill.
Or, there will be a lot fewer FTE’s and a lot more contractors. Microsoft for one manages to employ thousands
of contractors and pay zip zero nada for benefits.
Once you reach the 25th employee you just setup a new LLC and start over with employee #1.
It’s also a great way to keep part-time employees part-time, such as Walmart has been doing for the last eight months.
The company I work for runs very lean. My first reaction to this story was, how many heads will roll to get us to 24....