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The worst policy idea in the world gets a bit better but still isn't good enough

Harry Reid's bill has made a number of complicated changes to the free-rider provision, a.k.a. The Worst Policy Idea in the World. The Center for Budget and Policy Priorities says these tweaks make the free rider a bit better, although others disagree with that analysis, and the whole thing is so bizarrely complex that I'm not sure anyone can confidently predict how employers will react to it. Full story here.

But the real answer to this policy isn't to tweak it. It's to replace it with the House's straightforward employer mandate. The Center for Budget and Policy Priorities is too polite to say that that's what they're saying here, but that's what they're saying here, and they're right:

The new provision is very different from the House bill’s employer requirements, under which firms that elect not to provide health coverage would pay a flat percentage of their payroll (2 percent of the payroll of non-covered employees for firms with payrolls between $500,000 and $585,000, 4 percent of payroll for firms with payrolls of $585,000 to $670,000, 6 percent of payroll for firms with payrolls of $670,000 to $750,000, and 8 percent of payroll for firms with payrolls larger than $750,000). The House provisions would not create incentives for firms either to try to minimize the hiring of workers from lower-income families or to convert full-time positions into jobs of less than 30 hours per week.

The employer requirements in the House-passed bill would raise $135 billion over ten years, according to the Congressional Budget Office. The Senate provision would raise $28 billion, about one-fifth that amount.

There will need to be vigorous discussion of these issues in conference, where there should be opportunity to make changes in the Senate bill’s employer-requirement provision.

By Ezra Klein  |  November 20, 2009; 3:16 PM ET
Categories:  Health Reform  
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Unfixed + complex = radioactive = stupid = inequitable = [the underlying problem we set out to fix to begin with]

Posted by: bcbulger | November 20, 2009 3:35 PM | Report abuse

i agree. Free rider is garbage policy. THey need to ensure employee dumping on the exchange doesn't happen and with this, it will. This and the individual mandate i much prefer from the house bill.

I hope they're still planning on scoring the bill that comes out of conference btw since you mention the drastic differences in revenues raised.

Posted by: visionbrkr | November 20, 2009 3:40 PM | Report abuse

No, IMAC is the worst policy idea, the least democratic-----with the most potential to harm many citizens.

Here is a letter about IMAC from President/CEO, Barbara Kennell of 'National Committee To Preserve Social Security And Medicare (NCPSSM) sent to Congress:'

--------"The Independent Medicare Advisory Council proposal being considered in the House includes many of the same flawed approaches seen in entitlement reform commission plans offered in the past, including; fast-tracked legislation which prohibits amendments and requires an up or down vote, statutory spending caps and sequestration of funding.

These provisions put spending cuts as the Medicare commission’s top priority.

That leaves little room for concerns about access to services or affordability, and could ultimately lead to a serious erosion of the benefits relied upon by millions of seniors and the disabled."

She goes on to say:

---------"Medicare reforms can and should be a part of the national health care transformation. However, analysis by the Congressional Budget Office has shown that Medicare spending is only a portion of the cost growth trend seen system-wide; underlining the need to control the growth trend throughout the entire health care system, not simply in the Medicare program.

This Medicare Advisory Council proposal shifts the focus away from system-wide reforms in favor of cutting Medicare to reduce the cost of health care reform."

And here is the "NATIONAL COMMISSION ON SOCIAL SECURITY REFORM " conclusion about the Senate's responsibility to the voter:

-------"We have limited our statement to Social Security, but many of the same arguments apply to other programs, such as Medicare. It too is vitally important to the nation, has lower administrative costs than private insurance despite its coverage of the most expensive part of the population, and has rising costs primarily as a result of the same pressures that are driving up the nation’s health care costs, private as well as public."

Like Social Security, it has never been subject to an expedited fast-track procedure.

The only reason to subject it to one seems to be simple avoidance of accountability."

( -11/19/09 statement to Senate Budget Committee,)

The above comments from these Medicare advisors to Presidents and the Congress conclude that Independent Medicare Commission (IMAC) is a fast track mechanism designed to kill debate in the House and the Senate on the drastic cuts to Medicare-------- IMAC is also a mechanism to bypass the democratic process.

Ezra needs to reminded that the largest special interest group involved with Medicare is still the VOTER.

Posted by: johnowl | November 20, 2009 4:04 PM | Report abuse

At first I thought the changes were an improvement from the SFC plan, but it's clear that more employers will simply switch to a <30 hour work week avoid the mandate. This is a disaster for the working poor, who desperately need hours to try to make ends meet.

Unlike CBPP I see little chance that the employer mandate will prevail in conference and therefore I consider this another reason to oppose the bill.

Posted by: bmull | November 20, 2009 10:33 PM | Report abuse

bmull you're absolutely right. I'm in NJ and NJ mandates that everyone (if the employer wants a small group (2-50 EE'S)plan and the benefits that come with that as opposed to individual coverage) has to be offered coverage if they work over 25 hours per week. You couldn't imagine how many employees work 24 hours a week. Not to mention how many times we get applications to add someone that's been at the company for 2-3 years and has never been offered the benefits and never knew any better or was afraid to ask. This is going to be so ugly.

Also in NJ employers in the 2-50 market are required to only pay a minimum of 10% of the premium and many of the smallest employers who can't afford it do just that. Now that they're going to have to pony up more cost as required by law (if they don't circumvent it somehow) you don't think wages will go down because of it or people won't get laid off?

Posted by: visionbrkr | November 20, 2009 11:38 PM | Report abuse

Just to be a twit, I note that you link to your September 16 post on the worst policy idea ever. I called the free rider provision the "worst tax ever" in July

Posted by: rjw88 | November 21, 2009 5:17 AM | Report abuse

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