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Senate Health Bill: A Trillion-Dollar Federal Takeover

A new draft forwarded by Kennedy and Dodd spells obvious disaster for the American worker. (Get details on PJTV's virtual health care forum here.)

by
Jeff Emanuel

Bio

July 18, 2009 - 12:36 am
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Among its myriad negative points — which include tax hikes, individual mandates, and billions in locally-distributed pork — a health care overhaul bill passed Tuesday by the Senate Health, Education, Labor, and Pensions (HELP) Committee contains a two-pronged mechanism for increasing government’s already enormous footprint within the health care market and for driving private insurance into the ground.

When the first public draft of the Orwellian-titled “American Health Choices Act” was released at the beginning of June, it contained language mandating that employers with 25 or more workers offer health insurance to their employees or face a federal fine. The level of that fine, as with almost every other penalty and tax increase provided for in the bill, was to be left to the discretion of the secretary of Health and Human Services.

This new ability to impose taxes and levy fines of an amount entirely at her discretion would be a breathtaking expansion of the appointed HHS secretary’s power.

When an evaluation by the nonpartisan Congressional Budget Office found the AHCA’s net cost — that which would have to be spent above built-in revenue increases and offsets — to be around $1.6 trillion (a number that many experts and outside evaluators find to be reminiscent of the Medicare forecasts at its inception, which put the cost of the now $37 trillion program at less than $10 million), while only extending health coverage to approximately a third of the 45 million American uninsured, public backlash was significant enough that the HELP committee members writing the bill took steps to bring that projected cost down from a trillion and a half dollars into the hundreds-of-billions range.

Sens. Edward Kennedy (D-MA) and Chris Dodd (D-CT), the chief architects of the AHCA, did this in two ways. First, they took over one of the jobs they had delegated upward to the secretary of HHS — establishing the dollar amount employers with 25 or more workers would be penalized for not offering health insurance. They set these penalties at $750 annually per full-time employee and at $375 annually per part-time worker.

This dollar amount is significant for two reasons. First, small businesses, which employ almost half of working Americans according to the National Small Business Association (NSBA), often don’t provide health insurance to employees because they simply cannot afford to do so. Adding $750 per worker to those cash-strapped businesses’ overhead costs will make cuts somewhere else necessary.

Whether those savings come in the form of employee pay cuts, freezes on hiring, or layoffs, workers are the ones who will feel the pain from this attempt by Washington to “help” them by penalizing their employers.

Second, larger employers, which currently shell out an average of $4,704 a year for individual workers and $12,680 for those with dependents (numbers courtesy of the Kaiser Family Foundation), will see the option of a $750 annual fine as an incredibly desirable alternative to continuing to pay thousands of dollars for each employee’s health insurance.

By dropping the coverage they currently offer workers, larger employers will be able to save anywhere between four and twelve thousand dollars on health benefits alone — a no-brainer of a decision.

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