After a year of voting “present” on health care reform, the President has finally unveiled a plan of his own. Predictably, it is a cornucopia of incredibly ill-conceived provisions.
But by far the craziest in a time of high unemployment is that which fines businesses for not providing health coverage. Any such firm with more than 50 employees will be “assessed” as follows:
A firm with 51 workers that does not offer coverage will pay an amount equal to 51 minus 30, or 21 times the applicable per employee payment amount … the applicable payment amount for firms with more than 50 employees that do not offer coverage to $2,000.
In other words, the cost for a small business that wants to hire that 51st worker will be $42,000, plus the worker’s salary. The plan “applies the same firm-size threshold across the board to all industries.”
Consistent with the Senate bill, small businesses with fewer than 50 workers would be exempt from any employer responsibility policies.
One hardly needs to be a Harvard-trained economist to predict how most small businesses will respond to such perverse incentives. They will strive to be “exempt from any employer responsibility policies.”
Those with fewer than 50 employees will be careful not to hire anyone who will put them over the threshhold. Those with slightly more than 50 will find some way of laying off workers.
It is, of course, true that most people are employed by small businesses. So, this provision of Obamacare 2.0 is not merely bad policy. With unemployment hovering near 10%, it’s absolutely insane.
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