Businesses Wary of Details in Obama Health Plan
AGAWAM, Mass. — Dave Ratner, owner of Dave’s Soda and Pet City, is pretty sure he is about to get “whacked” by the new state law that requires employers to contribute to health care benefits for their workers or pay a $295-per-employee penalty. In order to avoid thousands of dollars in fines, Mr. Ratner is considering not adding part-time workers at his four pet supply stores in Western Massachusetts.
But the penalty in Massachusetts is picayune compared with what some health experts believe Senator Barack Obama, the Democratic presidential nominee, might impose as part of his plan to provide affordable coverage for the uninsured. Though Mr. Obama has not released details, economists believe he might require large and medium companies to contribute as much as 6 percent of their payrolls.
That, Mr. Ratner said, would be catastrophic to a low-margin business like his, which has 90 employees, 29 of them full-time workers who are offered health benefits.
“To all of a sudden whack 6 to 7 percent of payroll costs, forget it,” he said. “If they do that, prices go up and employment goes down because nobody can absorb that.”
Obama will take office as we await data on whether the US economy is in a recession or merely tottering on the brink. The notion that in such an environment he will go full speed ahead on both a tax hike on "the rich" (i.e., couples earning over $250,000, not the rich rich) and a new payroll tax more or less guaranteed to quash employment is absurd.
Yet people will vote for him in a week because Obama "gets it" and has a better plan for dealing with the economy. Uh huh.
More from the Times on Team Obama's plan to hide the ball:
But when [Obama] announced the plan in May 2007, he emphasized that employers would share in the cost.
“We will ask all but the smallest businesses who don’t make a meaningful contribution today to the health coverage of their employees to do so by supporting this new plan,” he said.
Left undefined has been what size firms would be exempted, what constitutes a “meaningful contribution,” and how much noncompliant businesses would be required to pay. Senator John McCain, the Republican nominee, badgered Mr. Obama in two of their debates to define the penalty, but Mr. Obama did not rise to the bait.
“We made a decision even before the plan was rolled out not to decide,” said David M. Cutler, a Harvard economist who speaks for the campaign on health care. “It’s not that there’s a decision out there that we’re not telling. It’s literally that we’ve decided not to decide.”
That may be smart politics. But it makes business groups nervous that Mr. Obama might impose an unmanageable burden. They also worry that any time his health plan faces a shortfall, businesses will be asked to up their ante, as has happened in Massachusetts.
Not deciding on the extent of the new business tax is a slick gambit if the press will let them get away with it. Wait, what do I mean, "if"? The Times could have covered this anytime between May 2007 and today. And why do they frame the story as that of business being suspicious of the plan? Who bears the burden of layoffs?
Let's hear from some economists:
Economists believe the cost of health benefits is ultimately shifted to employees through lower wages. When wages cannot be lowered, layoffs may result. Katherine Baicker of Harvard and Helen G. Levy of the University of Michigan have projected that play-or-pay might push 224,000 workers into that category.
Layoffs and lower wages - change we can believe in.
WE BELABOR THE OBVIOUS: Organized labor loves anything that depresses wages and employment in the non-union sector, so do not look to them to criticize Obama's plan in defense of the little guy. C'mon, this is why they support him.