A Post Aug. 25 editorial asks whether opponents of federally mandated health-care benefits have any ideas besides "doing nothing" if they fail to support Sen. Edward Kennedy's proposed legislation to require all employers to pay for worker health insurance.
Small-firm owners and workers, who make up the bulk of the working uninsured, already pay 10 to 40 percent more for health care than their large-firm counterparts. At an estimated average annual cost of $1,186 per employee, Kennedy's proposal does little to provide relief. And the bill's provision to establish complicated pooling mechanisms for small firms does nothing to ensure lower prices.
Moreover, given the $25 billion annual price tag of Kennedy's plan and that the pool of unemployed uninsured would increase under an employer mandate, Congress should look very hard at alternatives.
One plan Congress should enact is extending to all business owners the 100 percent tax deduction for health premiums now allowed corporate owners. This would go a long way toward expanding health coverage. Currently, corporations with fewer than 10 employees are more than twice as likely to offer health benefits as unincorporated companies of the same size. This is easy to understand: unless you are incorporated, as a business owner you can deduct only 25 percent of your health premiums.
Another alternative is to develop a "bare bones" catastrophic plan. To promote and lower the costs of such a voluntary employer/employee group health plan, it may be necessary for the federal government to preempt state-mandated benefits. In order for individuals of very low income to participate, assistance such as Medicaid could pay for part of the working uninsured's premiums. Over 60 percent of the uninsured live in families with income less than 200 percent of the federal poverty standard, and almost a third livein families with below-poverty income. Several states are expanding their Medicaid programs on an experimental basis to cover low-income workers or allowing small employers to buy in.
These options, and others under way around the country, involve forgone revenues to some degree. However, they are not a $25 billion sledgehammer to an $8 billion charity-care problem.
The result of employer-mandated health care would likely be reduced work hours (part-time workers would not be covered), layoffs (many firms simply could not afford this benefit) and lower wages (employers only have so much to divide between wage and nonwage compensation), especially among minimum-wage workers and marginal small firms. This issue ranked second of all the concerns of the almost 2,000 delegates to last summer's White House conference on small business.
Yes, there are constructive alternatives to the Kennedy bill other than doing nothing. These alternatives take into account the nature of small firms currently not providing coverage and the characteristics of their work force. They provide a sensible approach to expanding health coverage.
The writer is chief counsel for advocacy of the U.S. Small Business Administration.