[California] businesses with 10 or more workers that choose not to offer [health insurance] coverage would be required to pay 4 percent of their total Social Security wages to a state fund that would be created to subsidize the purchase of coverage by the working uninsured.
…The plan…would also require doctors to pay 2 percent and hospitals 4 percent of their revenues to help cover higher reimbursements for those who treat patients enrolled in Medi-Cal, the state’s Medicaid program.
Here is the full story. I can’t imagine that the state of California has the fiscal wherewithal to deal with the inevitable results of these incentives.
I predict a tremendous number of small businesses firing employees to get below the 10 number, and then re-hiring them as “Independent Contractors” for exactly the same wage
Part of the Massachusetts universal-coverage plan (which I believe kicks in fully in July) requires employers above a certain size who do not offer health insurance to pay some fine (I think per-employee) to the state care pool. This fine is absurdly small when compared to the actual cost of health insurance for employers — not even on the same order of magnitude. I am curious to see how this will play out.
lannychiu,
Good call.
Companies not offering health insurance tend to have low paid workers. They will take the 4% offer rather than buying insurance.
As for taxing hospitals and doctors, why not tax nurses and pharmacies too?
If the state is going to do this then the tax should be put upon health insurance company revenues or by income tax. The costs of the poor should be spread across the largest base.
There was a piece on this on NPR yesterday. Why can’t major policies like this be picked apart for all to see? Also, do Arnold’s advisers take these sort of objections into consideration, and just up the price to overcome? I can’t believe they are just naive.
“The incentives as described here, both for MA and CA, seem designed to push most employees into the state insurance pool.”
Maybe I’m on glue, but that’s the only incentive (or disincentive if you want to look at it that way) in this plan. I must be missing somethng big rather stupidly, so please, someone tell me what I am overlooking.
Isn’t this a multi-round game? Isn’t a new tax much harder to implement than a rate adjustment on an existing tax?
It strikes me that both MA and CA have the right strategy — “penetration price” to get into the market, then adjust
price to reach an equilibrium level of customers. They also need to get a critical mass of the voting public to be a part
of the scheme quickly for it to survive.
Also, a year from now they will have much more information about the slope of the demand curve.
Christopher:
“Non-rational people are frustrating! Ahhhh!!!!!”
But it is not rational to be frustrated. So, this means that you are not-rational. Which means that, logically, you must be frustrated with yourself for being frustrated with non-rational people.
Ragerz
What makes the first sentence of your last post true?
Like most forms of regulations and interventions this will ultimately be an enormous failure. Prices will rise, taxes will rise, the budget will expand, and a bad situation will become much much worse. And every player in the game will do their darndest to shit the costs on to someone else. Employers onto consumers, the legislature onto taxpayers, doctors onto the legislature and consumers back onto the legislature. This ought to be fun to watch this program fail. Nothing like watching politicians doing INSANE things in the name of “social cohesion” and “shared responsibility.”
Ragerz,
While I certainly understand the government’s motivation in preventing such gaming of the system, I am still confident that the percentage of employees working as “independent contractors” will rise, in some form or fashion, as a result of the legislation (if it passes).
When substantial sums of money are on the line, people tend to become very creative and persistent.
I’m not 100% rational. That’d be boring.
But I try to make rational decisions. The argument that healthcare should be tied to ones employer because ones employer benefits from non-sick workers is not completely unfounded, but it’s not rock-solid. My employer would benefit from me having a well-maintained, safe, and well-insured car to drive to and from work. Why shouldn’t they [be forced to] provide me one? My employer would benefit from me being more educated. Why shouldn’t they [be forced to] provide me with more education?
I’m not against employers offering healthcare (or company cars or tuition reimubursement). But I’m against the government mandating that they provide such things. My employer doesn’t have the responsibility to take care of my health; if they do, what does that say about my automony as an individual!?
I just don’t see how we can give up responsibility without giving up liberty.
John Pertz asks:
“What makes the first sentence of your last post true?”
I think he refers to the point the sentence where I write: “But it is not rational to be frustrated.”
Let me qualify. Under some, less restrictive definitions of rationality, emotion can be part of rationality. However, under a more strict definition, emotion or feeling cannot be any part of rationality. I was using the more strict definition. Clearly, frustration is based on emotion, not logic.
Peter,
Did these companies allow these contract programmers to work from home, or did they make them come onto the company premises? Were these workers paid by the job, or by the hour? Did the company make the programmers use company computers, or are the programmers allowed to use their own computers? Were the programmers given sufficient lattitude in terms of how the went about the programming task, or were the heavily supervised?
It could be that some of these people have a legitimate claims against these companies. Employers are obligated to pay half of their employees FICA taxes. But not for independent contractors. So, if these companies were not following the law, these workers are entitled to have half their FICA taxes paid by these companies. Also, the IRS will slap them with a hefty fine.
It is possible to make anonymous tips to the IRS…
Perhaps my first post was a little snide, but why wouldn’t small business owners do what is in their economic best interest and avoid the regulation if possible. It seems truly rational on their part. A couple possibilities other than re-classifying workers as independent contractors
1) Splitting up their business into separate units, for example a drug store could become “A Convenience Store” and “A Pharmacy” sharing one roof. Have separte owners for each, perhaps a husband owns one and a wife the other, and you can have up to 20 workers under one roof. The model might be the “Starbucks” within a “Barnes and Noble”.
2) Fire workers, and invest in technology to increase overall productivity. For grocers this could be increased use of automatic check out machines.
3) Outsource more services. Instead of hiring a janitor, you could have a cleaning service come once a week.
4) Hire illegal immigrants as workers, since you can probably hide their employment from the government officials.
Of course this will necessitate substantial use of private lawyers to strucute and potentially litigate, and probably a large increase in monitoring costs from government officials. But no one said that universal health insurance will be cheap.
Would there be any legal consequences for paying patients to go across state lines for care if the state taxes doctors heavily enough? This wouldn’t work for day-to-day stuff (I’ve got a bad sinus infection, I think I’ll fly to Seattle to see my doctor about it.), but might work for specialist care, elective surgery, etc.
I guess there’s a trend of doing this for very expensive surgery, even across borders–bypass surgery at 10% of the US price in a hospital in Bombay. I expect that if the US moves to a single-payer plan, especially one designed to get rid of private medicine, those services will grow explosively.
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Now, the people who have been brought in to improve this district are no doubt well-intentioned and good human beings, at least for the most part. I don’t doubt that they look at the statistics at this school and think “No child should be forced to learn in such an environment,† which indeed is what I think every time I go there. But that they then make the leap to defining the problem as the statistics is something that is both perpetual and maddening in my experience of US urban public schools.
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