The year was 2008. I remember it vividly. Senator Barack Obama, candidate for president of the United States, was discussing his plans for health care reform in a television ad. He talked about his plan for employer “shared responsibility.”
I generally didn’t pay much attention to politics or political candidates in those days. I always felt that if the government just left me alone, our business would thrive, and my personal life would be largely unaffected. But hearing the word “employer” in the ad, got my attention. I felt compelled to dig into the details of Mr. Obama’s plan for health care reform, which was published on his campaign website.
Barack Obama’s “shared responsibility”
That’s where I found a sketchy description of “shared responsibility” from an employer’s perspective. Mr. Obama’s plan would impose a federal mandate on large employers, defined as those with 50 or more employees, to cover a significant portion of health insurance premiums for their employees. Recruiting staff is a continuous and challenging task for employers. To satisfy their personnel needs, companies must offer competitive compensation packages, including benefits, chief of which is health insurance. Our company was no exception, especially considering that the demand for human talent in the technology industry has outstripped supply for, well, as long as the industry has existed.
So, while our wages and benefits were competitive, as dictated by dynamic market conditions, Mr. Obama’s shared responsibility would increase our monthly costs by nearly $20,000 – with fewer than 100 employees at the time. This increase was primarily driven by candidate Obama’s plan to require that employers cover most of the premium cost of all coverage categories – not just the employee – but the employee plus their dependents, including the employee’s spouse.
The plan structure, still in effect today in the Affordable Care Act (ACA), mandates that large employers provide “affordable” coverage, where the employee’s cost of premiums would not exceed a specified percentage of their household income. But wait, that would mean an employer would have to ascertain the income of an employee’s spouse to determine compliance with the affordability requirement.
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