HEALTH CARE/Joan Retsinas

Pay or Play: The Revival

Twenty years ago state legislatures were staging "Pay or Play." The plot revolved around the millions of people without health insurance -- more precisely, the millions of employees without health insurance. States proposed a deal. Employers who didn't already pay for insurance for their workers would have two choices: The employers could enroll employees, at employer expense, in a plan; or employers could pay into a fund that would subsidize care.

The proponents formed a chorus. The advocates for the uninsured weighed in, but this bloc was neither strong nor cohesive. Some workers were uninsured temporarily, while searching for a better job or waiting for their insurance to kick in. Others didn't care because, at the moment, they were healthy. Many hospitals were enthusiastic, because uninsured patients ended up as "unpaid debt." As for employers, the large ones traditionally paid for insurance. Indeed, some, like General Motors, negotiated Cadillac coverage for their unionized workforce. These employers were paying indirectly for the hospital bills of nonpaying patients. So large employers either supported the bills or did not actively oppose them.

Twenty years ago, however, "Pay or Play" was running alongside other healthcare dramas, like the "Managed Care Promise." Managed care promised a solution to the problem of the uninsured: If costs plummeted, more employers, without government coercion, would sign up for a plan. "The Feds March In" had also opened. In this drama, the federal government was the deus ex machina to insure the uninsured. President Clinton starred.

The chorus of support for "Pay or Play" ranged from tepid to warm, but the chorus of opposition was loud. Owners of small businesses -- the mom and pops where legislators took their laundry, ate their lunches, bought their medicines -- argued that a "mandate" would prove calamitous: It would force up prices (an extra nickel for the cup of coffee), force small firms out of business (the small bookstore would lose out to the mega-chain), force layoffs, force bankruptcies. Most important, it might force some state legislators out of office.

This bloc was cohesive enough to make its point. Conservative ideologues who could not envision government as the solution to any social problem joined the fray: This mandate marked government intrusion. Finally, those people who hated taxes (the distinction between a mandate and a tax is blurry) yelled "foul."

This drama ended with defeat of the legislation.

Twenty years later, the actors have changed. The uninsured are more numerous, more frightened of calamitous expenses. (Few people can afford an emergency room visit for a minor mishap.) Small employers -- those moms and pops that could not afford to insure their shifting workforces -- no longer are central to the plot. Over the past decade, many neighborhood drug stores, bookstores, hardware stores and groceries have given way to mega-chains. Nobody expects small businesses to insure their workforces anymore. Most of us are pleased, and surprised, that so many have survived.

The new economic star is the mega-retail emporium. Giants like Wal-Mart, Home Depot and Target are the hotshot employers of the millennium. It used to be taken as given that large employers, like General Motors, offered generous benefits. Today's hotshots are more frugal. They discovered that they don't need to insure their entire workforce. Their part-time, non-unionized, low-skilled employees are grateful for their jobs. And uninsured low-wage workers are eligible for state-funded insurance (Medicaid or its extension for children). In some states as many as 10% of those employees are on the public rolls.

Not surprisingly, states, which thought they were paying the tab for workers whose employers did not offer insurance, have been blindsided by this influx of new enrollees. So states are central to the revival of "Pay or Play." States want to move more of the employed off the public dole, onto the large -- and profitable -- ledgers of their mega-employers.

Today the rival dramas have folded. The "Managed Care Promise," which opened to promising reviews, withered: Even with managed care, health care costs have risen. This administration closed down the "Federal Promise."

In 30 states, legislators are trying to revive "Pay or Play," drafting bills that would force employers to spend 8-11% of their payroll on health insurance or pay a fee to the state. Maryland was the first to pass such a law. This revival may be a hit.

Joan Retsinas is a sociologist who writes about health care in Providence, R.I. Email

From The Progressive Populist, Feb. 15, 2006

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