A piece of the rock.

A PIECE OF THE ROCK

Unable to sell the idea of government-funded national health insurance, Senator Edward Kennedy has come up with a new tactic: make corporations pay for it. The Minimum Health Benefits for all Workers Act of 1987, recently passed out of the Senate Labor and Human Resources Committee, requires all businesses grossing over $250,000 to provide vastly expanded health-insurance benefits for employees who work more than 17.5 hours a week. Eighty per cent of the cost of the expanded insurance must be paid by the employer--100 per cent for workers earning less than $4.19 per hour. Deductibles are quite low, and benefits generous: of 74 companies surveyed by a New York consulting firm (Towers, Perrin, Forster, and Crosby, Inc.), not one offered a package including all of Kennedy's goodies. Companies whose health plans don't meet the stringent new requirements would be forced to purchase insurance from a list maintained by the Secretary of Health and Human Services. The bill also creates regional health-insurance bureaucracies to oversee compliance and to force insurance companies to offer the plans.

According to a study by the Institute for Research on the Economics of Taxation (IRET), the bill would double employers' health-insurance costs ($102 billion in 1985) and knock about $25 billion out of the economy. The Federal Government stands to lose $30 billion in revenue (health insurance is partially tax-deductible).

Hardest hit would be small businesses, which were responsible for 60 per cent of the 17 million new jobs created between 1976 and 1984. In order to keep insurance costs down, small businesses would be likely to consolidate several part-time jobs into one full-time position. The Health Insurance Association of America estimates that 2 to 6 per cent of minimum-wage workers would lose their jobs if the bill were enacted.

Witnesses before the committee have called IRET's methodology "fundamentally flawed," according to David Nexon, Health Advisor for the Labor and Human Resources Committee, who points to four studies, by the Congressional Budget Office, Decision Research Inc., and two academics, that estimate net job losses ranging only from zero to 100,000. Two studies claimed that increased employment in the health field would offset the job losses. The bill's effect, says Nexon, would be equivalent to about a 5 per cent increase in the minimum wage.

But John Satagaj, president of the Small Business Legislative Council, points out that many small businesses don't provide insurance because they can't afford it. "In most cases, if the employees do not have coverage, neither does the owner." Also, workers who already have insurance stand to lose other, more-valued job benefits if government forces businesses to provide (and workers to accept) an expansive health-insurance package.

Chamber of Commerce health-insurance expert Fred Krebs says the bill won't go anywhere this year, but Satagaj notes that now Kennedy has made the issue "one that must be considered in a serious way. That was the objective of the first round: Get the issue of health care on the front burner."