The comprehensive health care reform legislation introduced by Democratic leaders in the Senate on this week contains less onerous requirements on employers that do not yet offer insurance than a similar bill passed by the House earlier this month.

Still, employer groups oppose the bill on numerous grounds. A chief concern among employers as well as some economists is that a requirement for all individuals to purchase insurance -- deemed necessary to spread risk -- is enforced by a relatively weak penalty.

Individuals would be required to purchase health insurance, but the penalty for not doing so would be small -- $95 per person in 2014, rising to $750 in 2016. 

Likewise, some economists said a weak penalty against employers not offering insurance could make dropping coverage an appealing alternative.

[E]mployers with more than 50 full-time employees would be assessed a fine up to $750 for every employee who works more than 30 hours a week if any employee received health insurance subsidies from the government.

. . . Small employers would receive subsidies based on the average income of the firm to help defray the cost of providing insurance to full-time workers.

Employers and insurers also criticized the expansion of government health programs they fear will cause underpaid hospital and medical providers to shift costs to private employers.

. . . The bill would be paid for by increased taxes on the health industry, an excise tax levied against insurers and employers who self-insure on “Cadillac” health plans, as well as other fees, such as a 5 percent tax on cosmetic surgery.

. . . In an important caveat, self-insured employer plans and multiple-employer welfare arrangements, known as MEWAs, would not have to meet the “essential health benefits package” minimums as defined in the bill. These plans would be protected by ERISA, which allows them to define the plans as they see fit, though employees could opt out of the plans if they were too expensive, according to the bill. Self-insured plans would still have to provide a health plan that meets the minimum actuarial value standard of 60 percent.

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