Business Group Supports Employer Mandate for Health Insurance, But Rejects Clinton Proposal

Strategic Insights -

A business group representing over 250 major corporations has announced its support for an employer mandate that requires companies to pay a portion of their employees' health insurance premiums. The group, the Association of Private Pension and Welfare Plans, recommends that employers cover 60% of the premium costs, while employees cover 40%. This proposal differs from the Clinton administration's plan, which would require employers to pay 80% of the premium costs.

The group's decision was reached reluctantly, as its members generally prefer to maintain control over employee benefits. However, they believe that a properly structured employer mandate is the least objectionable option for achieving universal coverage. To preserve the existing employment-based insurance system, the group favors an HMO plan with cost-sharing as the optimal benefit package. They also propose coupling the employer mandate with government subsidies for low-wage employees, without regard to the size of firms.

The group opposes exemptions for small businesses, citing a study by the Wyatt Co. benefits consulting firm. Exempting small employers from paying a share of employee premiums would lead to cost-shifting, increasing the burden on large firms and small businesses that do offer insurance. The study found that a partial mandate would cover 20 million fewer workers through employment-based health benefit plans and increase the cost of government subsidies to low-income families.

Key Takeaways:

  • The Association of Private Pension and Welfare Plans supports an employer mandate that requires companies to pay 60% of their employees' health insurance premiums.
  • The group recommends that employees cover 40% of the premium costs.
  • Exempting small businesses from paying a share of employee premiums would lead to cost-shifting and increase the burden on large firms and small businesses that do offer insurance.
  • A study by the Wyatt Co. benefits consulting firm found that a partial mandate would cover 20 million fewer workers through employment-based health benefit plans and increase the cost of government subsidies to low-income families.
  • The AMA proposes a mandate exempting small firms, with subsidies for low-income workers.
  • The group opposes capping business expense deductions for health benefits paid by employers.
  • Incentives to encourage workers to enroll in lower-cost plans are supported, such as caps on the amount of paid health benefits deductible from income tax.
  • The productivity of a particular job, not the size of the firm creating the job, determines whether the job can support the cost of health benefits.

Statistics:

  • The Association of Private Pension and Welfare Plans represents over 250 major corporations.
  • Large firms cover 64% of their workers with paid insurance, while smaller companies cover only 34%.
  • A study by the Wyatt Co. benefits consulting firm found that exempting small employers from paying a share of employee premiums would lead to cost-shifting, covering 20 million fewer workers through employment-based health benefit plans.

Sources:

  • The Association of Private Pension and Welfare Plans
  • The Wyatt Co. benefits consulting firm (study)
  • The AMA (proposed plan)