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Health Reform Ideas in the Primeval Soup
Unformatted Document Text:  23 thus an employer mandate has the potential to significantly reduce the number of those without health insurance.. 57 Because most of these proposals feature temporary or permanent subsidies or tax breaks for small employers, it is not a no cost approach for the federal government, but the budget impact is small compared to a significantly expanded public program. This approach is also invisible to most Americans. Those who are currently have work-based health insurance will do so without change under an employer mandate. Thus, this would be minimally disruptive to the existing insurance system. If all employers were required to purchase health insurance, it is also likely that some positive changes would be fostered in the insurance market, probably the expansion of purchasing pools. Such a development should contribute to lower premium costs for all small employers, including those currently offering insurance. The “play or pay” version of employer mandate, which was prominently discussed and analyzed in the lead up to the 1992 election, gives all employers an ability to opt out of the private insurance market, but still retain their obligation to contribute financing to the health insurance of employees. Weaknesses There continues to be opposition to employer mandates. Many economists criticize the basic economics of this approach. They argue employer mandates ultimately are paid for by employees in the form of reduced wage increases. This is especially true for low wage workers for whom an insurance premium cost may represent a substantial share of total wage. 58 Unless such a mandate is accompanied by significant insurance market reform, small employers are still likely to find a standard health insurance policy more expensive than for larger firms, especially since many of the later self-insure. 59 If significant and permanent subsidies must be provided to small employers as part of a political accommodation for employer mandates, then one of the great attractions of this approach, minimal public expenditures, may be an illusion. Summary From the 1971 Nixon plan to the early 1990s debate the idea of employer mandates as a simple and straight-forward way of approaching universal coverage with minimal disruption was a prominent idea in the policy soup. The advocacy coalition promoting this idea has been composed of those who seek to achieve universal coverage quickly, but 57 John Graves and Sharon Long, Why Do People Lack Health Insurance? AUrban Institute Policy Brief, #14 (2006), p. 4. 58 Alan Kruegr and Uwe Reinhardt, “Economics of Employer versus Individual Mandates, Health Affairs, (Spring II 1994), p. 34-53. 59 Jon Gabel, et al, “Self-Insurance in Times of Growing and Retreating Managed Care, Health Affairs, (March-April 2003), p.266-78.

Authors: Brasfield, James.
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23
thus an employer mandate has the potential to significantly reduce the number of those
without health insurance..
57
Because most of these proposals feature temporary or
permanent subsidies or tax breaks for small employers, it is not a no cost approach for the
federal government, but the budget impact is small compared to a significantly expanded
public program.
This approach is also invisible to most Americans. Those who are currently have work-
based health insurance will do so without change under an employer mandate. Thus, this
would be minimally disruptive to the existing insurance system.
If all employers were required to purchase health insurance, it is also likely that some
positive changes would be fostered in the insurance market, probably the expansion of
purchasing pools. Such a development should contribute to lower premium costs for all
small employers, including those currently offering insurance.
The “play or pay” version of employer mandate, which was prominently discussed and
analyzed in the lead up to the 1992 election, gives all employers an ability to opt out of
the private insurance market, but still retain their obligation to contribute financing to the
health insurance of employees.
Weaknesses
There continues to be opposition to employer mandates. Many economists criticize the
basic economics of this approach. They argue employer mandates ultimately are paid for
by employees in the form of reduced wage increases. This is especially true for low wage
workers for whom an insurance premium cost may represent a substantial share of total
wage.
58
Unless such a mandate is accompanied by significant insurance market reform,
small employers are still likely to find a standard health insurance policy more expensive
than for larger firms, especially since many of the later self-insure.
59
If significant and permanent subsidies must be provided to small employers as part of a
political accommodation for employer mandates, then one of the great attractions of this
approach, minimal public expenditures, may be an illusion.
Summary
From the 1971 Nixon plan to the early 1990s debate the idea of employer mandates as a
simple and straight-forward way of approaching universal coverage with minimal
disruption was a prominent idea in the policy soup. The advocacy coalition promoting
this idea has been composed of those who seek to achieve universal coverage quickly, but
57
John Graves and Sharon Long, Why Do People Lack Health Insurance? AUrban Institute Policy Brief,
#14 (2006), p. 4.
58
Alan Kruegr and Uwe Reinhardt, “Economics of Employer versus Individual Mandates, Health Affairs,
(Spring II 1994), p. 34-53.
59
Jon Gabel, et al, “Self-Insurance in Times of Growing and Retreating Managed Care, Health Affairs,
(March-April 2003), p.266-78.


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