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Baucus Health Care Bill Has Loosest Employer Mandate

Posted by: John Tozzi on September 16, 2009

The new health care reform proposal from the Senate Finance Committee places the lowest burden on employers of the three major bills out there now. From the Journal:

The House version of the health legislation would require some employers to pay as much as 8% of payroll as a fine if they don’t offer coverage to workers. Under the Senate Finance measure, employers who decline to provide coverage would face a smaller penalty, and in narrower circumstances.

The Senate Finance legislation — set to be unveiled on Wednesday — says employers with more than 50 full-time workers would pay a $400 fee for each employee if they don’t offer health insurance. The fee would be triggered if any employees apply for federal tax credits to buy coverage.

The bill also drops plans for a public option, a major political sticking point, although not one that small business owners seem to fall clearly on one side or the other.

For a summary of the two other proposals, see this explainer. Since that was published in July, the House bill has been revised so that businesses with less than $500,000 are exempt from any “play-or-pay” mandate. (The previous level was $250,000.)

Reader Comments

Carol Cross

September 17, 2009 7:17 PM

I see from reading my paper today that the newest plans want to drop the public option but provide plans for the federal government to subsidize low income workers who can't afford to pay the "going" price for their health insurance, and whose employers aren't obligated under the law to provide health insurance to them.

It looks to me like this is another government subsidy of big franchising (big business) and the franchisors who earn great profits because of the low income workers and the cheap labor and venture capital of franchisees.

CEO's of some of the big franchisors earm several thousand dollars an hour and live high and well because of the labor of those who work for minimum wage in the franchise industry and who have no health benefits or employment benefits of any kind, as a general rule.

Has franchising been so successful and lucrative because franchisors pass off the risk and expense of being employers to the smaller fish, the franchisees, who bear the costs and obligations of being employers? But, in reality, can franchisees survive if they pay royalties, commissions, and advertising fees to their franchisor and health costs for employees as well? Probably not! --and they haven't been doing this.

The play or pay mandate will probably exempt a good share of the Mom and Pop single unit franchisees who compose so much of franchising today. But, what about the multiple unit franchisees? If they are not exempt under federal law, will they want adjustments from their franchisors and a reduction of their royalties?

While it may be expedient, is it fair and in the best interests of the American people to subsidize Big Business franchising with taxpayer dollars. Big Franchising depends on low-income workers to maximize their profits but are they paying their fair share and contributing to the greater good of our country? What are the social costs of the continuing growth of franchising in our economy?

No easy answers!

Chris Spencer

September 22, 2009 7:31 PM

It would be great for me to offer health coverage to my employees in my two small supermarkets, but I can't. A mandate for me to do so would require me to terminate two $35,000 per year employees. And if cap & trade is passed, any my electric bills go up $30,000 per year, there is another job or two lost.

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What's it like to run your own company today? Entrepreneurs face multiple hurdles new and old, from raising capital and managing employees to keeping up with technology and competing in a global marketplace. In this blog, the Small Business channel's John Tozzi and Nick Leiber discuss the news, trends, and ideas that matter to small business owners. Follow them on Twitter @newentrepreneur.

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