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Legislators Seek Alternatives To ‘Fair Share’ Laws

September 16, 2011
Related Topics: Health and Wellness, Latest News
Maryland’s Fair Share Health Care Act, which passed that state’s legislature in January.

But a judge’s ruling in July that the Maryland law violated the Employee Retirement Income Security Act sent a shudder through state legislatures across the country. By year’s end all 28 proposals were dead. Now legislators are looking for new, less punitive and perhaps more productive ways to expand health insurance coverage.

“Often when ideas are put forward that don’t succeed, people will go back to some drawing board and say, ‘What can we learn and what can we do that is different?’ ” says Richard Cauchi, a policy expert at the National Conference of State Legislatures, a national bipartisan research and policy organization.

In Washington, state Rep. Eileen Cody sponsored a “fair share” bill last year calling for a 9 percent payroll tax to be levied against employers with 5,000 employees or more if those companies didn’t offer employee health insurance. Though the bill died before the July court decision in Maryland, Cody says its failure has forced state legislators to devise a more comprehensive reform that would not exclusively target large employers. The lesson of the bill’s defeat prompted Cody and others to have a more frank discussion of the limits of pay-to-play legislation.

“I hope we do something broader,” Cody says. “The fair-share bill itself is trying to stop the erosion of employer coverage; it does not do a lot to cover more people.”

The principal argument against pay-to-play legislation is it does little to cover the estimated 46.6 million people without health insurance because it does nothing to help small businesses pay for employees’ health coverage. That’s where health insurance is eroding at the fastest rate. And, many people without health insurance are not part of the workforce or are between jobs.

“If [universal coverage] is the goal, you have to go beyond employer mandates to solve the problem,” says Aaron Yelowitz, an associate professor of economics at the University of Kentucky who has studied the issue.

For her part, Cody sees a viable model coming out of Massachusetts, where Gov. Mitt Romney signed a law in April requiring individuals to purchase health insurance. The Massachusetts law also creates a state-sponsored insurance market in which individuals can purchase health plans at lower prices than would have otherwise been available.

“This year there is more impetus for broader reform,” Cody says. “The bill got a lot of people interested in working on the issue.”

Even in Maryland, the death of the Fair Share Health Care Act may yet spawn a statewide reform similar to the Massachusetts effort. In November, the Maryland Health Care Commission, the state’s health care regulatory body, announced it was putting together a plan for legislators to consider in January. It would include an individual mandate and an affordable health insurance market.

Though the plan is in its initial stages, it does not call for an employer mandate.

Jeremy Smerd

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