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Clinton's Health Care Proposal Supports Employer-Sponsored Health Care System

Armen Hareyan's picture

Employer-Sponsored Health Care System

Presidential candidate Sen. Hillary Rodham Clinton (D-N.Y.) during the development of her proposalto expand health insurance to all U.S. residents "considered doing awaywith the employer-based system but concluded that people like it," the Wall Street Journal reports.

Theproposal, which Clinton announced on Monday, would require largeemployers to offer health insurance to employees or contribute to afederal fund that would help workers purchase coverage. In addition,the proposal would provide tax subsidies to small businesses to helpcover the cost of health insurance for workers. The proposal also wouldallow employers to select health plans from a network of private planspart of the Federal Employee Health Benefit Program or a public planmodeled on Medicare.

According to the Journal, manyanalysts "say the employer-based system isn't the most efficient orlogical way to deliver insurance," but "one of the lessons Mrs. Clintonsaid she drew" from the failure of her 1993 health care proposal isthat "insured Americans get nervous if they think their coverage willhave to change." Clinton said, "We looked at every permutation of howyou get to universal health care," adding, "There's a great attachmentto the employer-based system, even though it is eroding."

Manyemployers "want to be making ... decisions" about health insurance foremployees, Clinton said, adding, "It may be because it's the only thingthey know; it is something that has always been done, so they don'twant to give it up. But that came as something of a surprise to a lotof us." In addition, many employees remain "adamant" that they retainemployer-sponsored health insurance, Clinton said.

Meanwhile,the Clinton campaign said that the proposal, which would requireresidents to obtain health insurance, currently does not includepunishments for those who do not obtain coverage but added that Clintonmight consider such a provision (Meckler, Wall Street Journal, 9/19).

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'Pay or Play' Requirement

In related news, health care experts on Friday met on Capitol Hill todiscuss the potential effects of a "pay or play" requirement, a mandatethat employers offer health insurance to employees or contribute to agovernment fund that helps workers purchase coverage, CQ HealthBeat reports. The Clinton proposal and health care plans announced earlier this year by presidential candidates Sen. Barack Obama (D-Ill.) and former Sen. John Edwards (D-N.C.) include such a requirement for large employers.

Mark Pauly, a health care systems professor at the Wharton School of the University of Pennsylvania,said that such a requirement likely would prompt employers to reducewages for employees to cover the cost. He said, "The employer mandateis really using the employer to collect taxes from the workers."

In addition, some experts cited a recent study conducted by researchers at the University of Michiganthat found such a requirement could result in the loss of jobs for190,000 U.S. residents. Such a requirement also likely would have toexclude small businesses and, as a result, could leave somelower-income residents without health insurance, Kosali Simon, anassistant professor of policy analysis and management at Cornell University, said.

According to Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology,such a requirement should include significant penalties for employerswho do not offer health insurance to employees to encourage them tooffer coverage. Massachusetts recently enacted such a requirement,though Gruber noted that the penalty was set too low (Lubbes, CQ HealthBeat, 9/18).

Reprinted with permission from kaisernetwork.org. Youcan view the entire Kaiser DailyHealth Policy Report, search the archives, and sign up for email deliveryat kaisernetwork.org/email. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, afree service of The Henry J. Kaiser Family Foundation.