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Arin Dube: Study shows majority of employers support mandate in city health insurance plan

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PAUL JAY, SENIOR EDITOR, TRNN: Welcome to The Real News Network. I’m Paul Jay in Washington. The health-care debate is back on in Washington as the House passes a bill to repeal the Obama health care act. President Obama will in all likelihood veto it, so this is not going to go very far. But there will be a coming fight about amendments to the legislation, whether to strengthen it or weaken it, depending what side you are on [in] all of this. But one of the big issues in the legislation is the issue of employer mandate: does the government have the right to tell employers and individuals that they must buy into insurance? And there are some models about whether this works or not. One of them is San Francisco. And a recent study shows that employers and people in San Francisco are finding the employer mandate workable. Now joining us from Amherst, Massachusetts: Arin Dube, who did this study. He’s an assistant professor at the University of Massachusetts and an associate at the PERI institute. Thanks for joining us, Arin.


JAY: So, Arin, you did a study of the situation in San Francisco. What did you find?

DUBE: So in 2006, voters in San Francisco passed a health care ordinance requiring employers with 20 or more workers to pay for health care. So today if you are an employer in San Francisco with between 20 and 99 workers, you pay, for each worker, $1.37 an hour for health care. If you have 100 or more workers in San Francisco, you pay $2.07 an hour for every worker. So this is a fairly substantial mandate. And one part of this mandate is to allow employers to either pay for health care directly by buying health insurance from the private market, or to pay to the city, and then the city actually provides the care to the workers themselves and their family members.

JAY: In other words, a public option.

DUBE: Exactly, a public option that employers can buy into. At the same time, the city also vastly expanded its clinic systems and hospitals to provide accessible and affordable health care to those who may not even be working. So overall, [when] all is said and done, this was a fairly ambitious attempt to increase health-care access to a large number of people.

JAY: And how does it work out? How many employers are buying directly from the private market, and how many are going through the public option?

DUBE: Right. So the public option has turned out to be fairly popular, in that about 18 percent of employers are using that for at least some of their workers. [Something] To keep in mind: San Francisco to start off with had a fairly high rate of health-insurance offerage of around 90 percent or so. So that means that at least some of the people who were providing health insurance but not to all their workers, for instance, are using the public option to do so. So one of the interesting things we have found is that there was a lot of opposition to the health mandate prior to its passage. In fact, it went all the way to the Supreme Court of the United States, which finally refused to actually hear the opposing argument that this was preempted by ERISA, which is a federal law. So it’s interesting, then, to see, now that there’s been some time since the passage of the law, what employers think today. And what we found was surprising. Sixty-one percent of employers in San Francisco that we interviewed–and we interviewed over 500 or so San Francisco businesses, a representative sample–actually say they support the health-care ordinance, and this includes about 71 percent of employers who are low-wage employers. Now, these are exactly the employers who probably felt particularly threatened by having to pay something substantial like this, and apparently that’s not been a concern, which is a really reassuring thing. It has implications for understanding how the federal mandate might affect the economy.

JAY: Now, why hasn’t it had more objections, in the sense that at $2-plus an hour, if you’re already paying just above minimum wage, that’s a big up.

DUBE: That is. So it’s interesting to actually talk to some of the restauranteurs, for instance, restaurants being a fairly high-impact industry, and to see actually what they did. And we actually did such a survey, and we found that a good number of them have actually started some kind of a surcharge on the bills that gets passed on to consumers as maybe 4, 5 percent additional cost to their bills when you go out to eat. And consumers have been willing to certainly bear that. And that’s been one of the channels through which I think the cost increases have been absorbed. But there probably also might be other channels. Generally, we have a fairly ill-functioning health care system in this country, which is partially job-based, but that means that effectively people choose jobs not necessarily ’cause that’s the best job for them in terms of being a good match or a productive match, but rather maybe this–the employer provides some type of health insurance that they really need. That’s not a good way of allocating people to the jobs. And so when you actually do reform the health-care system like we’re about to do federally and partially we did in San Francisco, there are some productivity gains that emerge from such a process. That’s important to keep in mind when thinking about how the economy overall responds to these [inaudible]

JAY: So people can move from employer to–job to job and they don’t lose their health care insurance in San Francisco.

DUBE: That is exactly the case. And so that effectively frees up–free up people to choose jobs not based on health care considerations but on other considerations.

JAY: Now, one of the big differences between San Francisco and the national program that’s been passed by the Obama administration is that there actually is a public option in San Francisco and they gave up on that nationally. Isn’t that rather a significant difference, especially now that there’s a mandate that all individuals have to buy insurance? We’re starting to see insurance rates are going to go up.

DUBE: Well, I think that’s going to be an interesting question to look at. Generally speaking, insurance rates have been going up for a while now, so we have to be careful in sort of attributing that to the unforeseen results of the Obama policy.

JAY: But one of the criticisms of the Obama policy is that everyone’s mandated to buy it, but there’s no effective cost controls because there’s no public option.

DUBE: I think generally speaking it’s always good to have more options–almost always, I should say, especially an option whereby the state or the city or the country can provide health insurance that’s affordable to people. So I completely agree that that’s in general something that makes sense economically. I think the city of San Francisco did well to design, to have that as part of their mandate. I think it’ll be interesting to see state-level exchanges may be structured differently in different states. And this is an important thing to keep in mind for different states in thinking about how to structure their exchange and whether to have something like the public option that, for instance, there is in San Francisco. That should be a part of that for individuals, as well as for employers, to potentially buy into.

JAY: In other words, create it at the state level, even if it didn’t pass at the national level.

DUBE: That’s, I think, certainly an option, and that’s an option that I certainly hope that some states keep in mind in designing the exchanges.

JAY: Now, in the San Francisco experience, do you find–and if so, how much–employers that previously had a better health-care insurance dump it for cheaper public insurance? That’s another question mark that’s been raised about a kind of Medicare-for-all plan.

DUBE: Absolutely. In fact, that was one of the concerns that was raised by critics beforehand. So that is in fact something we looked at. We actually found that San Francisco employers were less likely to drop or reduce benefits in any way than employers in the surrounding areas that were not affected by the mandate. So it actually strengthened the employer-based system. Even as some employers chose to use the public option, that was done maybe for workers who didn’t have coverage, as opposed to those who did. So we did not see any reduction in private coverage. We saw, actually, an increase in both private and public coverage.

JAY: Why would that be? You’d think there would be some push on the side of employers to get the cheaper coverage.

DUBE: Well, because most of the people who actually were not covered in San Francisco tended to be lower-wage workers. Those are not necessarily people you’re going to get as much of a subsidy from for providing private-market health insurance or group coverage. And so these are people who oftentimes were put in the public or city option. So, generally speaking, though, there’s been at this point a pretty good set of evidence, both in San Francisco as well as in Massachusetts, where there is a much weaker but nevertheless employer mandate and an individual mandate–. More significantly, we haven’t seen reductions in job-based coverage. So I think generally speaking the worry of dumping existing people with existing plans into something like a public option is not something we have seen.

JAY: Now, as you said just earlier in the interview, one city doing this isn’t going to have a big effect on the overall cost of health care in the system. And the single-payer advocates, the, you know, Medicare-for-all, their argument is you actually really can’t control health costs under the current Obama plan either, that if you don’t go to this full single-payer idea, there’s really no way to control costs. Does San Francisco teach us anything about that debate?

DUBE: I think, as you pointed out, it’s really hard to act till they have cost containment at the level of a single city. There are certain things, however, that we can do and see in San Francisco, and that is actually getting people away from using the emergency room as the primary source of their care and into clinics and other medical homes. And I think there’s some initial evidence–and it’s going to take longer to really get to see this more clearly, but there’s initial evidence that that is happening. And if that happens at a city level–and my guess is it’s going to happen more at the level of a serious federal health policy–and those do actually reduce costs to providing health care by reducing uncompensated care. And that I think will be something that has a negative effect on prices. In other words, that should actually reduce prices of providing health insurance, even in what the Affordable Care–.

JAY: Just–so the issue there is people who have insurance can go see a GP, and they don’t have to go to emergency rooms for everything.

DUBE: Exactly, because [the] emergency room is a really expensive way of providing primary care.

JAY: Right. Thanks very much for joining us, Arin.

DUBE: Thank you.

JAY: And thank you for joining us on The Real News Network. And don’t forget, if you want to look after the health of the The Real News, our health care program begins with the donate button, which is somewhere around this player. Thanks for joining us.

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Arindrajit Dube is Assistant Professor Economics at University of Mass (Amherst). Dube is a labor economist who received his BA in Economics and MA in Development Policy from Stanford, and his Ph.D. in Economics from the University of Chicago.His current work includes: the impact of minimum wage around state borders; the impact of labor relations in hospitals on patient health outcomes; the effects of employer mandates on health benefitsHis past work includes the assessment of the impact of the San Francisco minimum wage ordinance; the impact of outsourcing of labor services; how trade and capital mobility affects the labor market; changes in employment based health coverage in response to rising employee contributions; and the public cost of low wage jobs.