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Health Care and Small Business

Congress and the public are reeling from sticker shock over the cost of health care. So what can they do? Well, cover less people and then bring the cost down. But wait. We’re going to turn our health-care system inside out to cover only a fraction of the uninsured?  

It looks that way:

Senate Democrats and President Obama, trying to assuage fears about the cost of health reform, yesterday touted new estimates that put the price tag for one bill at $611 billion over the next decade. But the measure drafted by the Senate health committee falls far short of Obama’s goal of providing insurance to virtually every American. Analysis by the nonpartisan Congressional Budget Office, released in a letter yesterday, shows that it would cover just 39 percent of uninsured Americans in 2019 — or about 21 million of the 54 million people expected to lack coverage if no change is made.

In some sense, this seems worse than biting the bullet to cover the vast majority of the uninsured. After all, we started from the premise that the great problem here was “cost-shifting” from the uninsured to those who are insured. But if we are going to be left with more than 30 million uninsured, we won’t have addressed that issue—or the social-welfare goal of providing universal coverage. And really, can’t they come up with a cheaper way to cover less than 40% of the uninsured?

There is bipartisan disdain for this approach:

Republicans pounced on the figure, and even many Democrats complained that it was far too high a price for such little improvement. Committee staffers reworked the bill—and added a new provision requiring most employers to contribute to the cost of health insurance—to arrive at the lower estimate. Under the new proposal, any business with more than 25 workers would be required to offer coverage or pay a $750 penalty per employee.

Care to guess how many small businesses will keep their headcount at 24? Lots.

None of this suggests there is much consideration shown for how all this will play out in the real economy and in the arena of public opinion. When you consider that we are now bleeding jobs, think for a moment how monumentally silly is a health-care plan that encourages every small business to keep its payroll low.


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