Our Human Resources Blog

   While the media has been focusing most of their attention on the "public option" of health care reform, there are other ideas being brought to the table that could have huge implications for employers and the economy alike. Some of the other options being proposed include- employer mandates, insurance buying co-ops, changes to federal laws and regulations and new taxes.

One of the biggest issues for businesses is the employer mandate, also known as the "pay or play" mandate. This mandate would require businesses to offer "meaningful" health care benefits to their employees or pay a penalty that would contribute to a public fund to cover the uninsured.

In the House version of the reform package, employers with annual payrolls of more than $250,000 would have to provide "qualified" health care plans to employees.  They would also be required to cover at least 72.5% of premium costs for employees and 65% for other participants (spouses & dependents) Employers that don't offer health care would have to pay a tax of up to 8% of their total payroll. This tax revenue would be used to fund lower cost health care options to workers without coverage.  A federal health care board would be established to review plans and define what a "qualified" health care plan would include.

 The proposed purpose of this mandate is to establish "shared responsibility" for health care. In other words, to distribute the costs among government, individuals and businesses to make it less burdensome for all involved.  Needless to say most employers are opposed to the "pay or play" mandate as it is believed it would hurt business and kill jobs.  Employers don't want or need any new taxes or penalties placed upon them, especially in this economy when it's difficult to maintain a payroll with good wages and offer the required benefits.

In addition, many believe this mandate would result in a significant decrease in employer- sponsored coverage. Leading many businesses to "pay" rather than play, as paying would be less costly. (Currently employers pay an average of 10 -12% of wages on health insurance. Under the mandate if employers no longer offer insurance, they would be required to pay up to 8% of wages.)

I believe the biggest problem with this mandate is it does nothing to address the true underlying problem of health care-- high costs! Reduce health care costs and the price of insurance and more businesses would be able to provide coverage without putting their companies in financial jeopardy.

Stay tuned for next week's blog which will look at some of the other health care reform options.