The Substantially Similar Weblog

Those of you outside of Massachusetts (or the United States) may not have heard about our recent healthcare insurance debates. Left Center Left has some interesting entries on the lack of local political analysis and confusion about why the business community opposes the various legislative solutions where those solutions appear to be basically in their self interest.

The proposed solutions are converging on a tax on employers who do not pay for their employees’ healthcare. That tax would help pay for statewide coverage of all or most citizens, and hopefully encourage employers to provide insurance for their employees to avoid the tax. (There is strong dissent, for example from the Massachusetts Taxpayers Foundation, as to whether the tax would actually raise any money).

Critics argue that the tax will discourage employers from coming to Massachusetts. The two large employers singled out most frequently in the State for not providing healthcare benefits to their large work force are Wal-Mart and Dunkin Donuts. Is it even remotely possible that Wal-Mart and Dunkin Donuts would actually shut down (or stop opening up) stores if they have to insure their employees or pay an additional tax? Obviously increased labor costs (whether through tax or insurance) could cut into profitability—but is there any evidence at all that it would represent a “tipping point” that would cause these employers to shut down? (Note that despite Massachusetts’ reputation as “Taxachusetts,” a study last year that I can’t locate right now pointed out that the overall tax burden on Massachusetts citizens was about in the middle, compared to other states).

Even if the health insurance mandate depresses wages, it’s worth noting that it is cheaper for the employer to buy group health insurance for its employees than it is for each of those employees to buy it individually—both because of the bulk buying power and for tax reasons. It is thus not a “zero sum game” where employees wages should be depressed by the exact amount of the increased health care costs.

Finally, wouldn’t this measure actually encourage employers to come to Massachusetts who already insure their employees, since presumably the statewide insurance mandate should decrease costs to those already providing insurance as they will no longer be effectively subsidizing the uninsured who work for competitors and other employers? And aren’t those the kinds of employers we would like to attract, rather than more Dunkin Donuts and Wal-Marts? (In fact, wouldn’t fewer Dunkin Donuts lead to less heart disease, thus also cutting down our health care costs overall…?)