Somewhere in the labyrinth which is ObamaCare is a provision which charges employers an 8 percent penalty on total payroll if they do not provide a “qualified insurance plan” and pay at least 72.5 percent of the cost.
Many are concerned that businesses will simply drop their health insurance coverage and pay the penalty which of course they will likely do if the penalty is substantially less than their present employee health insurance costs.
It would seem this is the actual goal, thus ending employer provided health insurance and pushing employees, whether willing or not, into some type of government program. But this is a two-step process and the elimination of employer provided health care is only the first.
Then the second step. There will no longer be employer provided health care but the concept of the business covering the health insurance costs of their employee’s government plan will be engrained in the tax code and the public’s mind. And as we all know, tax rates change all the time.
Once the option of employer provided health care is gone, i.e. there are no providers of this product; the government will have a free reign in raising this “penalty” to whatever amount they can to cover the ever increasing cost of the government health care program.
This will be a relatively easy demagogic sell since the business saved money by dropping their health insurance plan. Why should these businesses be “allowed” to make more money for dropping their insurance plan?! Why is this “fair” to the employee? Why should the evil employer come out ahead? These increases in the health tax will be sold to poorly informed employees as not costing them a dime since their employer is paying for it. There is a free lunch!
As an entrepreneur and small business owner I can emphatically state this is not the case. When one plans for a new business or the hiring of a new employee, you take into consideration all the costs of this employee. You start with their expected annual earnings but also add in payroll taxes, costs of benefits and other associated costs.
This proposed health care tax will simply be one more employee-related cost, of course off-set by the elimination of health insurance expenses. And although politicians have long sold employees on the idea that their employer is paying much of their payroll taxes and health insurance costs, this simply isn’t true. You, the employee are covering all of it, whether you know it or not. Read that last sentence again, it is the truth.
Since the reality is these costs are coming out of your pocket, not mine, wouldn’t it be preferable to simply pay you the total amount and let you decide how and where to spend it? Rather than have your employer pay a higher and higher health care tax, why not simply give you the money and let you decide what to do with it? I’m willing to bet you will make better decisions on what is best for you and your family than some far-away government bureaucrat. Don’t fall for this two-step dance. As is always the case, in the end it is you who will be paying for it.
John Conlin is president of Littleton-based Conlin Beverage Consulting, Inc. EDITOR’S NOTE: This is an online-only column and has not been edited.
