More on Mass Health Bill-- The "Free Rider" Surcharge

Here's one interesting part of the Mass. health law that has largely been undiscussed in the media (from the legislative summary):

Free Rider Surcharge

The Free Rider surcharge will be imposed on employers who do not provide health insurance and whose employees use free care. Imposition of the surcharge will be triggered when an employee receives free care more than three times, or a company has five or more instances of employees receiving free care in a year. The surcharge will range from 10% to 100% of the state’s costs of services provided to the employees, with the first $50,000 per employer exempted. Revenue gained from the surcharge will be deposited in the Commonwealth Care Trust Fund.

De facto holding employers legally liable for the hospital bills of their employees is in some ways one of the strongest ways to encourage them to provide health care coverage-- more important than the measly $295 fee being assessed. 

As the provision stands, it only would encourage Massachusetts firms to provide catastrophic coverage to their employees.  But if extended, it's an interesting alternative to a general mandate that employers provide insurance-- if employers choose not to provide insurance, employees would know that they could show up to get care at public hospitals, knowing that the bill would be sent to their employer. 

Most employers would pretty rapidly get insurance for their employees under such a regime to avoid unexpected bills from the state hospitals.  It will be interesting to see how the Massachusetts system plays out in this regard.

BTW Ezra Klein has made a bit of a mantra of the idea that "Little is more anti-worker than forcing them to depend on their employer for medical care."  But this is wrong-- If EVERY employer has to pay for health care for their employees, then there is no problem for employees that their health care comes through their employer, since they know if they switch jobs, the next employer ALSO will be providing for their health care.  As long as the state covers folks during low-income periods such an unemployment, an employer-based health care system is wonderful for workers.

And this is the system in much of Europe.  Only a few countries don't tie health care largely to employment in some way or the other.

So folks should stop confusing our present system of health care, which has anti-worker aspects, with a system where all employers are mandated to provide health care.  The latter would be very good for America-- and avoid the budgetary games that Ezra notes are likely be at play in the Mass bill in coming years.   It is highly unlikely that any system, especially any state government health system, can afford a health care program funded purely through government taxation, so a strong employer component is essential if only because of budgetary realities.


Comments (4)

avatar

This seems a little naive. Yes, an employee mandate is better than what we have now. But, the surface area for problems in this scenario, especially with smaller firms, is so much greater than alternatives.

I am an advocate for getting something, and then working to improve it, but let's not confuse this with an ideal solution.

The thing that is interesting about this is a (R) presidential candidate and the incentives he has from a state like MA. 

De facto holding employers legally liable for the hospital bills of their employees is in some ways one of the strongest ways to encourage them to provide health care coverage-- more important than the measly $295 fee being assessed. 

It is also a sure fire way to cause discrimination in hiring against those with health problems and the elderly.

You have a very skewed view of what "employers" are capable of. Our little restaurant would provide health insurance if we could. But we sell lunch to a couple hundred college kids. How much money do you think we make? 

As for $295 being "measly", you live in a different world than those of us whose weekly paycheck is not much more than that. (and we have to sign the checks for our employees too.)

Check out max's latest. For the most part, he gets it. De-link employment and insurance. Period.

avatar Of course there are still problems for employees even if employers are all required to provide insurance. The most basic is the varying capabilities of insurance plans that employers carry. The real problem with the system overall is still cost. Small employers can't carry employee cost effective insurance without cutting into the capital they have available to grow their business. They would continue to be at a hiring disadvantage with the big boys and that would ultimately hurt the worker through decreased true competition for the workers' services.  2nd, there is the very real problem of lagging wages, mostly due to healthcare and benefits increases. This does nothing to alter that and in fact possibly increase employer costs, thus hurting wage increases even more.  3rd, sure emploees know that if they lose or change jobs they will still have insurance. But again, it is likely to be a diffeent plan. Insurance should be portable for the worker to make it worker friendly. and the only way to alleviate these problems is to remove the burden from the employer. 
avatar
If EVERY employer has to pay for health care for their employees, then there is no problem for employees that their health care comes through their employer, since they know if they switch jobs, the next employer ALSO will be providing for their health care. As long as the state covers folks during low-income periods such an unemployment, an employer-based health care system is wonderful for workers.

This seems to only be the case if all health plans are identical. When some plans cover things that other plans don't, that means that employees will still have to pass on jobs that they would otherwise take, simply so that they, their spouse, or their children can continue to get the healthcare they need.

Post a Comment

Inside Cafe



Cafe Features


August 18-22

Book Cover

September 1-4

Book Cover

September 8-12

Book Cover

September 15-20

Book Cover

October 6-12

Book Cover





Book Club Archive



Masthead

Editor-in-Chief
Josh Marshall

Site Editor
Lila Shapiro

Intern
Al Shaw



Subscribe to TPMCafe's feed.
Subscribe to TPMCafe's reader blog feed.

Advertise Liberally
Share
Close Social Web Email

"To" Email Address

Your Name

Your Email Address