The debate over health care reform includes a bewildering array of
contentious and consequential policy questions. It's easy to get lost
just trying to keep up with the terminology -- a "public option,"
health cooperatives, individual mandate, fee-for-service, risk pools,
guaranteed issue -- never mind evaluating which policies to support and
which to oppose.
While the public option has become the most vigorously debated of
these questions, and rightly so, another policy generating a lot of
political heat is the "employer mandate." Requiring employers to either
provide quality health insurance to their employees or pay a payroll
tax to help fund public provision of health insurance is a
controversial proposal, yet one deemed crucial for comprehensive reform
by the Obama administration and key Democrats in the House and Senate.
The primary criticism of such a policy, known as a play-or-pay
mandate because it requires employers to either "play" by providing
insurance or pay the new contribution toward public coverage, is that
it will lead to layoffs. U.S. Rep. John Kline, the ranking Republican
on a key House committee drafting health care legislation, made this
argument last week: Employer mandates could cost workers their jobs.
Kline, who represents Minnesota's Second District, is part of a
veritable chorus of policymakers and interest groups raising the
specter of job losses at every mention of play-or-pay.
While health care reform is indeed confusing, I have good news
to offer those struggling to make sense of it all: The question of
whether job losses should be expected from adoption of a play-or-pay
policy is neither complex nor bewildering. In fact, you can scratch it
off the list of contentious questions. I spent the better part of the
last six months studying this question in mind-numbing detail, and I
can say, with a very unusual degree of confidence for a policy analyst,
that claims that job losses will result from play-or-pay are baseless.
While some claims of imminent job losses are simply political,
coming from people and organizations who oppose President Obama's
reform initiatives, I think other such claims are informed by real
concern that a play-or-pay could lead to people losing their jobs. With
more than 8 percent unemployment in Minnesota and double-digit
unemployment on the near horizon nationally, it's hard to imagine a
more serious critique of any policy right now than its likely
contribution to further job losses.
But the people warning against play-or-pay draw their concerns from
a small set of academic studies. What they fail to recognize -- as I
discovered very quickly, after digging into the research -- is that
none of the studies predicting job losses from an employer mandate
looked at policies even remotely like those being proposed by the Obama
administration.
The cost of compliance with the kind of play-or-pay mandate proposed
by the administration would be somewhere between 4 and 8 percent of
payroll for "paying" employers, with small businesses that don't
provide coverage facing either a lower payment or no payment at all.
That's a tiny fraction of the costs modeled in the academic studies
predicting job losses. Once the actual kind of play-or-pay policy on
the table today is plugged into the same kind of conservative economic
estimation used in the prior studies, the expectation of job losses
simply disappears.
Moreover, as my study of play-or-pay -- published last week by the
Economic Policy Institute and the Institute for America's Future --
explains in detail: The net effect on employment from the president's
proposed health care reform package is sure to be not just positive but
very large. Many jobs will be added to the U.S. economy because of
increased demand for workers in the health care sector, improvements in
the efficiency of labor markets, and vast savings from reducing the
rate of health care cost growth -- just to mention three of the largest
boosts to employment.
My research shows that even if one considers the play-or-pay
employer contribution policy in isolation, there is no reasonable basis
for expecting job losses.
Policymakers and the public should not be distracted from the
extraordinarily important task at hand -- ensuring quality, affordable
health care for all and reining in the out-of-control growth of health
care costs -- by arguments that a play-or-pay employer contribution
policy will lead to job losses. It will not.
Phillip Cryan recently moved to St. Paul, where he is the assistant
organizing director of SEIU Healthcare Minnesota. His study "Will a
'Play-or-Pay' Policy for Health Care Cause Job Losses?" was prepared as
his master's thesis at the Goldman School of Public Policy at the
University of California, Berkeley.