One thing safe in health reform: Jobs

The debate over health care reform includes a bewildering array of contentious and consequential policy questions. It's easy to get lost just trying to keep up with the terminology -- a "public option," health cooperatives, individual mandate, fee-for-service, risk pools, guaranteed issue -- never mind evaluating which policies to support and which to oppose.

While the public option has become the most vigorously debated of these questions, and rightly so, another policy generating a lot of political heat is the "employer mandate." Requiring employers to either provide quality health insurance to their employees or pay a payroll tax to help fund public provision of health insurance is a controversial proposal, yet one deemed crucial for comprehensive reform by the Obama administration and key Democrats in the House and Senate.

The primary criticism of such a policy, known as a play-or-pay mandate because it requires employers to either "play" by providing insurance or pay the new contribution toward public coverage, is that it will lead to layoffs. U.S. Rep. John Kline, the ranking Republican on a key House committee drafting health care legislation, made this argument last week: Employer mandates could cost workers their jobs. Kline, who represents Minnesota's Second District, is part of a veritable chorus of policymakers and interest groups raising the specter of job losses at every mention of play-or-pay.

While some claims of imminent job losses are simply political, coming from people and organizations who oppose President Obama's reform initiatives, I think other such claims are informed by real concern that a play-or-pay could lead to people losing their jobs. With more than 8 percent unemployment in Minnesota and double-digit unemployment on the near horizon nationally, it's hard to imagine a more serious critique of any policy right now than its likely contribution to further job losses.

But the people warning against play-or-pay draw their concerns from a small set of academic studies. What they fail to recognize -- as I discovered very quickly, after digging into the research -- is that none of the studies predicting job losses from an employer mandate looked at policies even remotely like those being proposed by the Obama administration.

The cost of compliance with the kind of play-or-pay mandate proposed by the administration would be somewhere between 4 and 8 percent of payroll for "paying" employers, with small businesses that don't provide coverage facing either a lower payment or no payment at all. That's a tiny fraction of the costs modeled in the academic studies predicting job losses. Once the actual kind of play-or-pay policy on the table today is plugged into the same kind of conservative economic estimation used in the prior studies, the expectation of job losses simply disappears.

Moreover, as my study of play-or-pay -- published last week by the Economic Policy Institute and the Institute for America's Future -- explains in detail: The net effect on employment from the president's proposed health care reform package is sure to be not just positive but very large. Many jobs will be added to the U.S. economy because of increased demand for workers in the health care sector, improvements in the efficiency of labor markets, and vast savings from reducing the rate of health care cost growth -- just to mention three of the largest boosts to employment.

My research shows that even if one considers the play-or-pay employer contribution policy in isolation, there is no reasonable basis for expecting job losses.

Policymakers and the public should not be distracted from the extraordinarily important task at hand -- ensuring quality, affordable health care for all and reining in the out-of-control growth of health care costs -- by arguments that a play-or-pay employer contribution policy will lead to job losses. It will not.

Phillip Cryan recently moved to St. Paul, where he is the assistant organizing director of SEIU Healthcare Minnesota. His study "Will a 'Play-or-Pay' Policy for Health Care Cause Job Losses?" was prepared as his master's thesis at the Goldman School of Public Policy at the University of California, Berkeley.