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Bad for Business - Speaker Pelosi’s Health Care Takeover

Bad for Business - Speaker Pelosi’s Health Care Takeover

November 2, 2009

NOVEMBER 2, 2009

The Republican Conference has compiled a list of provisions in the Pelosi health care bill that would harm American businesses, particularly small businesses, and the economy as a whole:

Tax on Jobs Will Increase Unemployment.  The Democrat bill would impose $135 billion in taxes on businesses who cannot afford to finance their workers' health coverage.  The Congressional Budget Office has confirmed that this tax on jobs masquerading in the form of a "pay-or-play" mandate "could reduce the hiring of low-wage workers," and could also lead to wage stagnation as wage compensation is diverted to comply with new federal taxes and mandates.  A model developed by chief Obama advisor Christina Romer indicates that as many as 5.5 million jobs could be lost from the bill's new taxes-at a time when unemployment is at 26-year highs.

Hundreds of Billions in Taxes on Business.  In addition to the tax on jobs described above, H.R. 3962 includes nearly half a trillion dollars in other taxes-including a surtax more than half of whose intended targets are small businesses.  Imposing a total of $729.5 billion in higher taxes on a struggling economy would be a recipe for years, if not decades, of prolonged stagnation.

New Federal Mandates.  The Democrat legislation exempts employer coverage from the additional federal mandates included in the bill, but only for a five year "grace period"-after which all the bill's mandates would apply.  This provision, by applying new federal mandates and regulations-including an unprecedented federal micro-management of provider networks, and other diktats that would increase the cost of millions of policies-to employer-sponsored coverage, would increase health costs for businesses and their workers, and by tying employers' hands, would have the effect of encouraging firms to drop existing coverage, leaving their employees to join the government-run health plan.

New Federal Health Police to Enforce Mandates.  H.R. 3962 includes provisions requiring the new Health Choices Commissioner to conduct audits of health benefits plans in conjunction with States, and further authorizes the Commissioner to "recoup from qualified health benefits plans reimbursement for the costs of such examinations."  These provisions would likely lead to overlapping and duplicative requirements on private businesses-as well as higher costs due to inspections by the "health care police," which businesses themselves would have to finance.

Expanded Federal COBRA Mandates.  In an attempt to provide immediate benefits to the American people before the bill's coverage expansions commence, Section 113 of H.R. 3962 imposes a new unfunded mandate on businesses, by requiring an extension of COBRA coverage until such time as subsidies in the Exchange become available.  As individuals electing COBRA coverage have been documented to have health costs 45 percent higher than those of active employees, this provision would raise costs for businesses-as well as premiums paid by current employees-while encouraging firms to drop coverage entirely to avoid the expanded federal mandates.

Expanded Federal Retiree Mandates.  Section 110 of the bill prohibits employer plans from reducing benefits provided to retirees, unless firms also reduce benefits to existing workers-a costly provision likely to encourage plans to drop their retiree populations entirely.

Provisions a Boon to Trial Lawyers.  The bill includes language specifying that existing State private rights of action would apply to plans as currently permitted under existing law and establishes whistleblower protections against employee complaints regarding actual or potential violations of the bill's provisions.  These mandates would not only raise insurance costs, but would make businesses subject to new lawsuits perpetrated by the trial bar.