Employer Mandate

Congress is negotiating final details of proposed requirements that employers pay a substantial share of their employees’ health insurance or subsidize coverage of the uninsured.

The employer-based healthcare system has existed in America since World War II and is considered by many to be the bedrock of the nation’s health insurance system.

To shore up this system and to extend coverage for those not currently insured, numerous health policy experts have argued for an “employer mandate” requiring employers to contribute to coverage for their workers. This approach is reflected in health reform bills passed by both chambers of Congress, which include provisions that would require most large employers either to pay a share of the cost of their employees’ coverage or to pay a fee to help subsidize coverage for the uninsured.

Much debate surrounds employer mandates, with some believing that mandating employer-sponsored insurance is the most efficient way to extend coverage. Others believe that any efforts to spread the employer-based health care system in America would extend a bloated and ineffective system. Many believe that the employer mandate would be detrimental to businesses, and would further reduce their ability to hire. Still others think that the employer mandate would be improved upon if it were replaced with incentives like tax credits for employers who provide employees with insurance. The arguments for and against an employer mandate include:

  • What the “play or pay” approach would mean;
  • How the mandate would be enforced; and
  • How it would affect small businesses.

This Health Policy Brief looks at how such a mandate might practically function, and was published online on January 15, 2010 in Health Affairs.