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November 01, 2005

Well, SOMEONE's paying for it...

There's a point from the Globe's editorial today about the health care debate that really bears repeating, especially as we begin to hear resistance from some (though not all) business groups:

Spokesmen for small businesses came out against the plan, but it is unreasonable to expect care for their workers to be subsidized out of the free care pool. Hospitals, insurers, and companies that do provide insurance are the source of money for that pool. It is a drag on all three. DiMasi's assessment, less expensive then full-scale insurance coverage, would at least compel insurance-averse employers to contribute to the shared cost.

In other words:

  • Some employers are paying for health care for their employees.
  • Some are not.
    • These employers are foisting their employees onto the public rolls: Medicaid or the free care pool.
      • In other words, we're all paying for it anyway. If Wal-Mart doesn't pay, we do.

I am really sympathetic to the problems that employers have finding affordable health care. That's no joke: it's a major inhibitor to economic growth. (I'm hopeful that the eventual proposal will include various pooling, reinsurance and best-practices mechanisms to control costs for businesses.)

So much more reason to take away the current surcharge on those that do insure their workers, and get those that don't to kick in their fair share. That's not a business-killing proposition -- it's one that encourages businesses to do the right thing.

Posted by Charley on the MTA at 04:23 PM in Health Care, Massachusetts | Permalink


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I asked a question on another thread, and to the best of my knowledge it hasn't been answered.

The current proposal is for businesses of 10 or more people. For 1-9 employees, no tax is levied. For the 10th person, a 3% payroll tax is levied.

Is that tax 3% of the payroll for all 10 employees, or just 3% for the 10th? If all 10 employees make the same amount of money, say $50,000 per year, this is the difference between $1,500 and $15,000. The 11th would rsult in a total tax of either $3,000 or $16,500.

I believe that the law should be the latter. That is, the first 9 employees should never be counted. If not, then an employer considering adding a 10th employee will face an additional $15,000 in cost -- almost certainly too high an extra cost for the single additional employee. As a result, you'll see a whole lot of small businesses stuck on 9 employees, with stunted growth.

How to decide which 9 employees have exempted payroll? You don't. You take the average of all payroll, and multiply it by (num employees - 9).

Posted by: stomv | Nov 1, 2005 6:52:36 PM

stomv: To the best of my knowledge, reading that section of the bill, and feeling my brains dribble out my ears, there is nothing like that contemplated in the bill. I could be wrong. Gaming around the edges of such bills is very common -- same with tax brackets.

You should ask this on the HCFA blog, too.

Posted by: Charley on the MTA | Nov 1, 2005 8:47:09 PM

RE future proposals: screw insurance pools, I want UNIVERSAL HEALTH CARE BABY!

And then maybe I'll consider ever hiring employees for my own business. I am SO not able to pay the current (even pooled) rates. Not even 50%.

Posted by: Lynne | Nov 1, 2005 9:50:13 PM

stomv, see here. Abby asked that question, too.

Posted by: Charley on the MTA | Nov 1, 2005 11:30:09 PM

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