Experts: Baucuscare Would Leave Poor Out of Work

Congressional Quarterly/Newscom

While the liberal policy community in Washington mostly acknowledges that the health care plan put forward by Sen. Max Baucus (D-MT) falls short of its counterparts in the House and Senate, they also believe it would be an improvement over the status quo. But at least one of the measures, reportedly supported by Sen. Olympia Snowe (R-ME), is so poorly designed that it has some critics downright worried.

“The Baucus plan is going to create all kinds of incentives to avoid hiring low income people,” says Edwin Park of the Center for Budget and Policy Priorities. Shortly after Baucus unveiled his proposal, CBPP–a respected policy shop that tilts liberal–released a report warning about this very possibility.

“It’s the one [measure] that we’ve been worried about in the Finance Committee discusions or months now,” Park warned.The issue involves penalties employers are required to pay if they don’t offer insurance to their employees. And it would be easy to fix–if it didn’t have Snowe’s backing

In the House legislation, and the Senate Health, Education, Labor, and Pensions bills, the incentives are lined up right.

“In the HELP bill you pay a fee–a fixed dollar amount for every one of your workers if you don’t offer coverage,” Park says. “In house you pay a percentage of your payroll if you don’t offer health insurance.”

But in the Finance Committee’s bill employers are only required only pay penalties on a per-employee basis, when the workers they don’t cover end up receiving subsidies from the federal government.

That creates an clear, and perverse, incentive. “You hire someone who’s middle income, you don’t pay a fee,” Park says. Specifically, the plan would motivate employers at mid-size and large businesses to hire people who, say, have spouses who earns plenty of money, or who otherwise already have insurance–anybody who won’t incur the fee.

A well structured employer mandate, Park notes, isn’t just fair to low wage workers–it’s also raises funds so that those who do have to buy insurance on the individual market also have adequate subsidies. The HELP bill’s employer mandate is projected to raise a modest amount (less than $100 billion) over 10 years. The House’s employer mandate would raise something like $150 billion over 10 years. Baucus’ would raise significantly less.

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