Baucus Bill: Employer Mandate in Sheep's Clothing

A lot has been written about how Sen. Max Baucus (D-MT) has taken a more pro-business approach in his health care bill than did any of the drafters of competing Senate and House measures. He's been praised by business groups for not proposing a "play or pay" mandate that imposes penalties on employers if they don't offer health coverage to their workers.

But is the praise deserved? Read the fine print of his bill, and you'll find a fee that looks a lot like a mandate.

Baucus insists his bill doesn't contain a mandate, and just in case you weren't sure, the description of the bill released by his office states that "an employer would not be required to offer health insurance coverage." But under Baucus's plan, if you own a company with more than 50 full-time employees and you don't have employee health coverage, you will have to pay part of the government's cost to help those uninsured folks in your company afford an insurance policy. Sound reasonable?

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Maybe. But how is that approach so different from the much-criticized employer mandate contained in the health care reform bill proposed by the Senate Health, Education, Labor and Pensions Committee? Under that measure, companies with payrolls exceeding $250,000 a year would pay a tax equal to $750 per worker if they do not offer basic coverage and pay 65% of worker premiums. So, for example, a 75-worker firm would pay $56,250.

Under Baucus' bill, companies with more than 50 full-time workers -- regardless of the size of their payroll -- would be charged a fee for each worker who receives federal tax credits to purchase his or her own insurance. Workers would be eligible for the credit if their income was below a certain amount and if their employer didn't offer coverage that they could afford. The fee would be based on the average cost of insurance sold through state-run exchanges set up under the bill. The levy could be as much as $400 per worker, so that 75-worker firm in the earlier example would have to pay up to $30,000 if every employee got the tax credit.

True, the two approaches are a bit different, and companies that failed to insure would be on the hook for less using Baucus' method than under the other Senate bill. Baucus would charge a fee only for each individual worker who claimed the tax credit. So it's possible you could have an uninsured workforce at a company where some employees were more tax-savvy than others. Or a business might have a highly paid workforce where no one would qualify for the affordability credit. So there's no explicit mandate. But the implied message is still the same: Insure your workers who would have trouble paying the full cost of health insurance or pay the government to pick up the slack.