Employer Requirement in Baucus Health Package Would Have Unintended Effect of Discouraging Hiring of Low-Income and Minority Workers

By Judith Solomon and Robert Greenstein, Center on Budget and Policy Priorities

While an employer responsibility requirement is an essential component of health care reform, a proposal included in the new health reform package that Senator Max Baucus unveiled this weekend would have serious consequences, particularly for low-income and minority workers and women.

Under the proposal, employers who do not offer health coverage would have to pay the full cost of the subsidies provided to employees who purchase coverage through the new health insurance exchange and qualify for a subsidy because their family income is below 300 percent of the poverty line. But employers would not have to contribute to the health insurance costs of employees with higher family incomes. The new requirement would apply to firms with 50 or fewer employees.

Many employers that do offer coverage also would be subject to this requirement. Workers who would have to pay more than 13 percent of their income for their share of the premium costs under their employer’s plan, and who have family incomes below 300 percent of the poverty line, could receive a subsidy to purchase coverage through the exchange. Their employers, however, would then be billed for those subsidies.

As a result, firms that offer coverage generally would be worse off under this provision than under the “play-or-pay” provisions of the House health care bill or the bill that the Senate Health, Education, Labor, and Pensions Committee has approved.

The Proposal’s Deep Flaws

The proposal has serious flaws, including the following:

Proposal’s Flaws Continued

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