Enforcing Employer
Health Care Requirements
Ken Jacobs
UC Berkeley Center for Labor Research and Education
ARM June 2010
Why an Employer Requirement

Historical Advantages of Job-Based Coverage

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Tax advantage
Shares risk
Ad i i
Administrative
i savings
i
over individual
i di id l market
k
Bargaining power
E ll
Enrollment
t simple
i l andd automatic
t
ti
Politics: Allows people to keep coverage they have
R d
Reduces
C
Crowd-Out
dO
Minimizes on-budget costs
History of Employer Requirements
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Nixon proposed in 1974
Ha aii 1974
Hawaii
Massachusetts 1988, repealed
Pepper Commission 1990
California 2003,
2003 repealed 2004
Massachusetts 2006
San Francisco 2007
Affordable Care Act 2010
San Francisco Health Care Security
Ordinance: Healthy San Francisco

Provides comprehensive health services to
uninsured San Francisco residents.
residents

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a broad-based network of providers
a choice of primary care medical homes
specialty care, pharmacy, emergency, hospital
an affordable fee structure
Residents are eligible, without regard to preexisting
i ti conditions
diti
or immigration
i
i ti status.
t t
It is an access program, it is not an insurance
product and is not portable outside of the city.
San Francisco HCSO
Employer Spending Requirement
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$1.96 for large employers, 100 or more
workers
orkers
=75 percent of average 10 county share of
cost of an individual plan, prorated by hour.
$1 31 an hour for firms with 20-99
$1.31
20 99 workers
=50 percent of the county share of cost.
Applies to workers 8 hours or more a week;
90 days or more on the job.
job
San Francisco HCSO
Health Care Spending Options

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Health Coverage
Health
l h Reimbursement
i b
Account
Direct Reimbursement to Workers
On-site Clinic
Healthy San Francisco

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Workers receive 75 ppercent discount
Non-residents receive MRAs.
Lessons from San Francisco
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Simplicity
Employer
l
Education
d
i
Employee Education
Enforcement
Employment: no measurable impact
Accountable Care Act:
Free Rider Penalty
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Firms with 50 or more FTEs
$2 000 per full-time,
$2,000
f ll time non-seasonal
non seasonal emplo
employee
ee if
employer does not offer coverage to any employees
and at least one employee receives a subsidy in the
exchange; does not apply to first 30 employees.
$3 000 per employee
$3,000
l
receiving
i i a subsidy
b id iin the
h
exchange if employer provides coverage.
When is coverage in the exchange more
cost effective than job-based coverage?
If cost of raising wages to enable workers to
purchase
h
coverage in
i the
th exchange
h
plus
l the
th
penalty is less than the cost of an equivalent
employer premium.
Single Coverage: Employer Decision to
Shift to Exchange if Workforce is Below Line
400%
No penalty
350%
FP
PL
300%
$2,000 penalty
250%
$3,000 penalty
200%
150%
100%
20
25
30
35
40
Age
Source: Premiums from Congressional Budget Office
45
50
55
60
Family Coverage: Employer Decision to
Shift to Exchange if Workforce is Below Line
No penalty
400%
$2,000
$
,
penalty
p
y
3 0%
350%
FPL
300%
$3,000 penalty
250%
200%
150%
100%
20
25
30
35
40
Age
Source: Premiums from Congressional Budget Office, based on family of four
45
50
55
60
Issues for Implementation and Further
Research
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Free-Rider: Far from Simple
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For employers offering coverage to some but not
all workers—no way to anticipate penalty.
How to administer without complicating
eligibility and enrollment.
Labor Market Distortions: Work Hours

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9.4 percent of workforce (12 million) work
b t
between
30-36
30 36 hhours a week.
k
40 percent have own employer ESI.