Take two: Employers want to provide health insurance

Perhaps I buried my lede a bit yesterday in a post about the ACA's employer mandate. So let me try a carve-out.

Josh Barro, taking at face value some bitching about the requirement that employers with more than 50 full-time employees offer health insurance to their employees, recently charged that the mandate is a mistake and that health reform should have pushed health insurance away from the employer-employee relationship.

Defensible as that diagnosis may be in the abstract, voters at large were not the only constituency resistant to weakening the employer-healthcare bond.  Big businesses, and a not inconsiderable number of small businesses, values their role as health insurer, seeing that role as an important part of their bond with employees, as a competitive advantage, and increasingly, as an opportunity to make their workforce more productive  -- not to mention as font of a tax-free form of compensation.

Call them crazy, as Matt Miller did in October 2009 when the National Coalition on Benefits, an association purporting to represent the interests of employers covering 130 million Americans in the health reform process, helped to shoot down Senator Ron Wyden's Free Choice Amendment, which would have enabled all employees to opt out of their employer's health care plan and buy insurance on the insurance exchanges established by what later became the Affordable Care Act. The group's motto: Don't Erode What Works to Fix What's Broken. *

U.S. employers want to provide health insurance

The Wall Street Journal has a good article today, by small business reporters Emily Maltby and Sarah Needleman, about three smallish businesses grappling with the the Affordable Care Act's employer mandate, which charges employers with more than 50 employees $2,000 per employee (excluding the first 30) if they don't offer coverage.  None of the business owners opt not to offer coverage. Here's the head of a small pizza chain with 90 hourly workers:

Next year, Mr. Stark intends to offer a health-insurance plan for the first time to comply with the law. "At the end of the day, if we take care of our team members, they will take care of the guests," he says. "I philosophically believe people having health care, regardless of age, is positive."

A consultant with 93 employees adds:

Here comes Bishop Romney

In Mitt Romney, Community Organizer, I noted that Romney, in his capacities as the Mormon equivalent of parish priest and a bishop, actually engaged quite deeply in the lives of his fellow Mormons. I suggested  that he really has to invoke this experience to counter the perception that he's lived his life in a superrich bubble. Yesterday in Ohio, Sara Murray reports, Romney cracked that Mormon kimono a little:

On Wednesday afternoon, though, there were glimpses of a candidate who could connect with voters as he disclosed a more personal side, one that’s rarely seen during his campaign events.

He spoke about counseling the unemployed through his work with the Mormon Church. He said his religion is an “unusual religion in a number of respects,” because of the rotating minister program Mr. Romney participated in as a volunteer for roughly a decade.

I expect to hear more in this vein.

Matt Miller's self-cancelling 'don't worry about the deficit now' argument

Matt Miller's argument that worries about the Federal deficit are overblown is self-cancelling.

The argument has two prongs. First, per his experience in the Clinton administration in 1993, he suggests that current deficit forecasts are often overblown.  A period of strong growth can change the picture fast. Second, Miller asserts that we more or less know what to do but lack the political courage.

The second point at least is incontrovertible.  Miller sketches out two key planks of likely deficit reduction: breaking Obama's pledge not to raise taxes on people making less than $250k per year and "trimming social security benefits for better-off retirees."  In other words, raise taxes and cut benefits.

But his argument that we should not worry now about the looming need to do just that makes no sense.  Blame Obama if you will for his no-new-taxes-under-$250k pledge. (I do: I have always thought that David Brooks' one valid fundamental criticism of Obama during the campaign was that this pledge would box him in.) Or defend it as a valid attempt to avoid the recurrent pattern of Republicans destroying our finances with tax cuts and Democrats getting killed at the polls for raising them -- as they did in 1994 -- by getting as much juice as possible out of taxing the wealthy.

Matt Miller clarifies healthcare reform

Matt Miller, a former Clinton budget official, provides rare clarity on the broad outlines of emerging U.S. healthcare reform and concludes:

Of course, just because Obama is on a path to give America the Romney health plan with McCain-style financing does not mean the Republicans will embrace it, if it seems politically more attractive to scream “socialist”. But the rest of us do not have to listen to them. Mr Obama can fairly claim to have championed a bipartisan health policy, even with few Republican votes.

Within that broader irony Miller captures a narrower one: Massachusetts healthcare reform, repudiated by the slogan-spewing former governor who signed it into law, is working:

The central mechanism through which Mr Obama seeks to extend coverage and restrain costs is via new “exchanges”, insurance clearing-houses, modelled on the plan Mr Romney enacted in Massachusetts. The idea is to let individuals access group coverage from private insurers, with subsidies for low earners.

The approach is so sensible that Ted Kennedy urged Massachusetts Democrats to support then-Governor Romney in passing it in 2006. The results have been impressive. The ranks of the uninsured have been slashed; just 2.7 per cent of residents now lack coverage, the lowest of any state – against 15 per cent nationally. Costs, which overran as the programme was brought in more quickly than planned, are now on budget.

The exchange, according to Miller - not the public plan, which he's assuming Democrats will sacrifice -- is the core of reform:

A federal version of this exchange (or federal sponsorship of state versions) would for the first time give non-elderly, non-poor Americans whose employers don’t offer coverage, or offer it at premiums they can’t afford, access to group insurance rates. It’s difficult to overstate the breakthrough this would represent. The inability of millions of Americans to access group coverage outside the employment setting is one of the most damning features of US healthcare. It means individuals with pre-existing health conditions are often uninsurable, which in turn explains why medical bills are, shamefully, a leading cause of bankruptcy. It locks budding entrepreneurs into jobs they loathe because their families need the coverage. Structuring these exchanges so health plans have incentives to compete on value is exactly the role government should play.

Miller also offers a broad perspective on cost, and an argument that ending or capping the employer tax exemption for healthcare is the logical way to pay for it:

Start with cost. It’s easy for foes to feign shock at Obamacare’s $1,000bn 10-year price tag, but a trillion dollars ain’t what it used to be. That is just over 0.5 per cent of gross domestic product over the same period, and barely 3 per cent of the roughly $35,000bn total healthcare spending during that time. If Mr Obama’s approach is otherwise sensible, the idea that America can’t afford it is preposterous...

When it comes to financing expanded coverage there’s no way to get there without revisiting the current scheme, under which employees escape taxes on employer-provided health benefits. This subsidy is so massive, at $250bn a year, and regressive – reserving its biggest bounty for those with the most generous plans – that a phalanx of health economists from both political parties recently begged Congress to trim it.

Miller's breezy assumptions that unions will cave on the employer tax exemption, and Obama and the Dems on the public plan, will be challenged by many who are deeply committed on both issues. He also does not address the crucial issue of how the emerging bill will tackle runaway healthcare inflation, which, as Peter Orzag never tires of reminding us, is the central front in the war on future deficits. But his 30,000-foot view does bring into focus the likely outlines of reform, the core issue of expanding coverage, and the absurdity of the current terms of U.S. political debate.