Buzzword: Pay or play

What does it mean? Under a "pay or play" system, employers are required to either "play" by providing health insurance to their employees or "pay" into a government controlled pool to help cover the uninsured. Dozens of state governments have enacted or have considered enacting some form of pay or play mandates in recent years. Massachusetts currently has the country's most comprehensive "pay or play" plan with requirements that all individuals have health insurance, either through their employer, through a subsidized government program, or on their own. Massachusetts citizens who do not have health insurance face penalties.

Why the buzz? Fewer people in the U.S. are being covered by private heath insurance; over the last two decades the extent of coverage has fallen from 70 to 63 percent of the non-elderly population. Thanks to the spiraling costs of health care and larger populations of uninsured people, state governments are facing huge challenges. The uninsured generally seek public health coverage in the form of Medicaid and other state-sponsored programs or costly treatment in emergency rooms. Most "pay or play" proposals are not as comprehensive as Massachusetts' plan. Some combine fairly strict "pay or play" requirements for larger employers with incentives such as tax credits or direct subsidies to smaller employers to encourage them to provide health insurance options for their workers.

Some critics of "pay or play" programs argue that such mandates reduce overall employment and are too much of a blunt instrument for funding health insurance for the working poor. The vast majority of those who benefit from pay or play mandates, say Cornell University professors Richard V. Burkhauser and Kosali I. Simon, live in families with incomes that are above the poverty line by twice or more. "Depending on how coverage is determined, the mandate will leave a significant share of the working poor ineligible for such benefits either because their hourly wage rate is too high or they work for smaller exempt firms," the two professors wrote in a working paper published by the National Bureau of Economic Research.

For more information:

National Conference of State Legislators Report on Pay or Play Legislation

Kaiser Foundation Report: Covering the Uninsured – Options for Reform

National Bureau of Economic Research: Who Gets What from Pay or Play Mandates

—Bob Williams, strategic resource director, Consumers Union

Read more on what to look for in a health plan and find out if you're among the 4 in 10 Americans who cannot depend on their health insurance.

Comments

[dolly]

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[Rita]

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