The administration’s decision to revise the employer “fair share” formula is breathtakingly shortsighted for a host of reasons. They’re fighting the wrong battle against the wrong enemy at the wrong time, and, in the process, endangering the broad coalition that has been critical to the success of health reform.

Contrary to the claims of advocates, the current fair share regulations reflect the carefully crafted compromise that broke the logjam and led to passage of the landmark legislation in 2006. The administration’s rationale for blowing open this hard-earned agreement is that employers aren’t paying their fair share. Let’s look at the facts.

It’s true that people with state-subsidized insurance are paying higher out-of-pocket costs this year – up to $25 million in the aggregate – but the increased price tag for the business community is far more. Not only are Massachusetts employers paying an additional $500 million to cover 85,000 previously uninsured employees and their dependents, but the $35 million being transferred from the Medical Security Trust is paid by employers, and $100 million of the $300 million in new corporate taxes will fund state health-care spending.

The ultimate irony is that the state’s increased assessments on employers, insurers, and providers may be covering a “shortfall” that does not exist. Enrollment in Commonwealth Care has been flat for several months. And even if spending on reform exceeds projections, any shortfall pales in comparison to the enormous shortfall in federal reimbursements that the state may face under the renewed Medicaid waiver.

Based on a false pretext, and for an almost insignificant revenue gain, the administration’s proposed fair share regulations risk a loss of employer support, a fracturing of the political coalition, a likely legal challenge under ERISA, and the abandonment of employee health coverage by many small businesses that are currently keeping up their part of the bargain.

Michael J. Widmer
President, Massachusetts Taxpayers Foundation