How The Employer Mandate and Benefit Tax May Save The Public Option

While the public option is the part of health care reform which has received the most press, there are several other important, contentious issues which are making a bipartisan health care reform bill agreement elusive. Two difficult issues are the employer mandate and a new tax on employer-offered health care benefits.

Republicans are strongly against even the minor employer mandate in the HELP Committee bill. The problem is the employer mandate is currently the most cost effective way to expand coverage in the bill. It was almost solely responsible for reducing the CBO scoring of the HELP committee bill's cost per uninsured individual covered by roughly 50%. It also stops the politically damaging determination that millions of Americans will “lose” their employer coverage (even though they would still be getting coverage from the health care exchange). Without the employer mandate, they will need to dramatically slash subsidies offered to help people afford insurance to get a bill under $1 trillion.

The possible “compromise” Republicans might accept is a “free rider” provision that employers must pay for workers on Medicaid or getting insurance subsidies. This is strongly opposed by Wal-Mart (which for good reason supports the employer mandate instead) and presumably therefore unpopular with the two Democratic senators from Arkansas. Given how the “free rider” provision would disproportionately hurt low wage employers, it would be an incredibly tough pill for both liberal and conservative Democratic senators to swallow.

A new tax on employee health insurance benefits in any form is amazingly unpopular with the American people. It is a proposal that makes Democrats on the entire political spectrum very nervous. Not surprisingly Harry Reid was recently forced to tell Senator Baucus to drop the proposal. The Senate Finance Committee has started fresh the search for a possible funding source.

Yet, Republican Senator Grassley continue to push for this very unpopular tax on health insurance benefits. Grassley demands that all money for reform comes from the health care system. If Republicans are unwilling to agree to a new tax besides the one on health benefits, it will make a bipartisan bill unobtainable.

The more likely health care will be passed with a purely partisan vote, the more likely that it will include a real public option. If it were the sole point of contention standing in the way of bipartisanship, the pressure from centrist Democrats would probably be enough to kill it. At issue though are the other demands made by Republican senators which are unacceptable some liberal, moderate, and conservative Democrats. The public option may not be the issue which kills bipartisanship, but it should strongly benefit from its death.