Human Resources News & Insights

Does Obama’s new health plan offer relief for employers?


The White House’s new health plan could lead to sweeping changes to reform — and one provision offers a ray of hope to employers.

On Monday, President Obama released a new health reform blueprint that attempts to bridge the gap between the bills the Senate and House passed last year.

And around the time you read this, Obama will present the proposal at a bipartisan meeting of congressional leaders.

Here’s what some of the key provisions in proposal look like heading into the meeting.

Employer mandate

Like the Senate bill, Obama’s new plan does not impose a mandate on employers to provide health insurance.

But it does make one significant change for businesses with more than 50 employees.

As you may remember, under the Senate bill businesses with over 50 employees would have to pay a $750 penalty multiplied by the number of full-time employees if any of their employees use taxpayer money to obtain health insurance.

Well under Obama’s new plan, businesses could deduct 30 workers from their penalty. So a company with 51 full-time workers, for instance, would multiply the penalty by only 21. But the new proposal raises the $750 penalty to $2,000.

Rate hike check-ups

One change employers may be able to get excited about: Obama’s new plan calls for giving the feds the authority to block insurers from making exorbitant premium-rate increases.

A new Health Insurance Rate Authority would be created to lay out what it views as reasonable rate increases, and those considered unreasonable could be blocked.

That could be good news for employers struggling to keep healthcare premiums down.

What to keep your eye on

The estimated cost of Obama’s new plan is $950 billion over 10 years. That’s more than the Senate’s bill but less than the House’s.

Other key changes in the plan:

  • The tax on high-end health plans (so-called Cadillac plans) would be delayed for all workers until 2018. Plus, the threshold for the tax would be raised to plans valued at $27,500 and above for a family of four. Under the Senate bill, only plans valued at $23,000 and above would be affected.
  • The plan does not include a government-run public health option.
  • It also eliminated a highly unpopular provision in the Senate bill — called the “Cornhusker Kickback” by many Republican opponents — which would exempt Nebraska from paying increased Medicaid expenses.

There’s no telling what’ll happen next, but Republicans have said they plan to carry their own ideas into the meeting with congressional leaders. And White House aides have acknowledged they are willing to fold Republican ideas into the new plan.

But White House Dems have stated they have no intention of throwing the plan out and starting from scratch — as Republicans have demanded.

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  • Tina Barham

    If I’m understanding this correctly, Obama’s generous 30 employee deduction is no favor if the penalty increases to $2,000. $2,000 x 21 = $42,000 and $750 x 51 = $38,250.

  • CLG

    You are exactly right. It is called semantics, plain and simple. Make it sound better when you say it really fast, but doesn’t bear for logical thinking. Sounds like his whole administration to me. They just need to shelve this and start all over with common sense and logical thinking.

  • Greg

    What happens if your company wants to offer insurance but because you can’t meet the 70% participation rule your plan has been terminated. Are you still stuck with the penalty?

  • Sandy

    What about fair competition accross State Lines, I think that is a biggy and should be included in the plan to keep premium cost down.

  • CLG

    Sandy, I totally agree. More competition for the insurance companies would drive down the premium costs. I don’t know why Congress won’t add that to the bill. The Republicans have touted that since they began talking about the healthcare situation. It makes more sense than anything. Tort reform and across state lines would lower costs.

  • Edward Sullivan

    Hey lets look on the bright side! If the employee needs taxpayer dollars to secure health insurance, that employee is not being paid enough to take care of his insurance needs. I think $2000 would probably be much cheaper than giving the employee a raise or offering insurance. If you dont want to provide the insurance the least you could do is support a program which helps keep your bread and butter healthy.

  • CLG

    Oh goodness, I think we are all lucky to have jobs in the economy today.


    How about competition as someone mentioned and some transparency in the costs of procedures, etc. Health care is one of the very few areas where you don’t know how much something is going to cost before you agree to it.