The Senate Finance Committee has put together a health care reform plan that includes an employer mandate known as “play or pay.” If an employer does not insure all of his employees, he will pay a fine for each uninsured employee. However, the productivity of some jobs does not generate enough income to pay both wages and health insurance. Let’s look at a hypothetical situation to see the unintended consequences.

Bob calls his 30 employees together and says, “The government says I have to start providing each of you with health insurance. This will cost $150,000/year, which is more than I make. So I am very sorry, but I am going to have to let five of you go to protect everyone else’s jobs.”

Now we have five people who had an income and were paying taxes. They still don’t have health insurance and now they don’t even have a job. The government will lose the revenue from the taxes they were paying, and taxpayers will now be on the hook for their both their income and their health insurance, via unemployment compensation and Medicaid.

Multiply this scenario by thousands of small businesses who cannot afford this plan and you have an idea of what is meant with the phrase “unintended consequences.”

Randall Bradley

Agency