Democrat Employer Health Insurance Could Move Taxes

As part of the health care reform package Democrats are promising to put into law, House and Senate members look to mandate employer health insurance. There are an estimated 46 million Americans who currently lack health care insurance. Democrats insist that mandating employer health insurance by law is the best way to cover these individuals. Republicans, however, fear such a law could cause layoffs by companies unable to afford such plans.

Penalties for those failing to provide employer health insurance are something Republicans take issue with. As the Boston Globe reports, companies in Massachusetts have paid more than $7 million in penalties since the state passed a law in 2006 mandating they provide insurance for their employees. House Democrats say their plan includes employers either providing health insurance for their workers or paying a portion of their payroll to the government to provide for such services. Companies, regardless of what they produce or provide, are in the business of making money. If employers cannot afford to provide such insurance plans for employees, layoffs will occur as business owners seek to balance their bottom line. The lowering of wages is also a worry of some in Washington.

The majority leader in the Senate, Harry Reid (D-NV), says he is open to the idea of taxing employee health benefits in order to finance part of the Democrats health care reform plan. Forcing employer health insurance, in this case, could cause a problem for President Obama who last fall called such a tax plan set forth by then Republican Presidential candidate John McCain “the largest middle-class tax increase in history.” There are also a number of union bosses who have publicly spoken out against taxing such benefits.

As part of the employer health insurance plan, lawmakers say they will look to provide a series of plans from which consumers and employers can choose from. Those in Washington insist such public plans would be subject to the same policies and consumer protections that private insurers are. While various details remain to be decided upon, Democrats insist their employer health insurance plan is crucial in solving the nation's uninsured problem.

Republicans contend, and perhaps rightly so, that a number of resulting unintended consequences will only compound the problem and increase the number of individuals dependent upon government-provided health insurance coverage.