I apologize for not responding right away, but I'm slammed with other stuff. There is a lot to say here, and I think it's important -- Eugene is raising some good questions. I'll try to respond in the next day or so; in the meantime, I'm very grateful for all the reactions, both supportive and critical (and both!) . . . please keep them coming, thanks.
On Tue, Dec 17, 2013 at 9:10 PM, Volokh, Eugene <vol...@law.ucla.edu> wrote: > The heart of Marty’s argument (I focus for now on item 1 below) is, I > think, an empirical claim: Large employers such as Hobby Lobby would be > better off just dropping coverage, paying the $2000/employee/year tax, > “us[ing] some of [the] enormous cost savings” to compensate employees for > the lost coverage, thus keeping the employees happy, and then pocketing the > rest of the “enormous cost savings.” (Indeed, if employees grumble over > the inconvenience or just the change, the employers can split some of the > rest of the enormous cost savings with the employees -- a win-win > proposition for employers and employees.) And, if Marty is right, this > would be true for employers generally, *not* just religious employers. > We should thus expect a large fraction of savvy employers to take advantage > of this option, purely out of respect for Mammon quite regardless of God. > > > > But I wonder whether this is empirically likely to be true, given not just > the nondeductibility of the tax, but also other factors, such as payroll > taxes on the compensation payment to the employees. It’s not surprising > that the Justice Department hasn’t made this argument, since the > Administration has long argued (unless I’m mistaken) that large employers > *won’t* drop employer-based health insurance. And the Congressional > Budget Office, > http://www.cbo.gov/sites/default/files/cbofiles/ftpdocs/121xx/doc12119/03-30-healthcarelegislation.pdf, > likewise took the view that only a tiny percentage of employers would drop > their health insurance, because “the legislation leaves in place > substantial financial advantages for many people to receive insurance > coverage through their employers, and it provides some new incentives for > employers to offer insurance coverage to their employees.” > > > > Now of course that was in 2011, and perhaps the analysis today would be > different. But the CBO’s estimates still give me pause. And if the CBO is > right, and large employers generally would lose financially -- rather than > gain from capturing some of the “enormous cost savings” -- by dropping > health insurance and adequately compensating employees, then I would think > Hobby Lobby and others would be in the same position. The mandate, even > enforced as a tax, thus would be a substantial burden. > > > > Am I mistaken in this? Marty, do you have any pointers to studies that > support your sense of the money flows on this, and contradict what I see as > the CBO’s view? > > > > Eugene > > > > > > Marty writes: > > > > 1. On your first point, even if the 4980H(a) tax were the equivalent of a > $3000 assessment (because it's paid with after-tax dollars), the average > cost for providing health insurance to employees is, as I understand it, > closer to $10,000, so the employer would save about $7000 per employee. > (In any event, there are no allegations in these cases that HL or CW is > significantly differently situated than a typical employer, e.g., that they > have a workforce comprised of almost all single employees with no family > coverage.) > > > In order to remain competitive for recruiting or retaining most of their > employees, the plaintiffs wouldn't have to kick in any extra money in > salary, because the employees would have their exchange-purchased plans > subsidized by the federal government (both in terms of the cost-savings > realized by virtue of the exchanges themselves as well as the government's > premium tax credits and cost-sharing reductions. To be sure, some of their > more well-compensated employees *might* have paid less in premiums for > the HL plan than they would to purchase a plan on the exchange (*maybe*-- > again, there's no allegation or evidence of that here). But to make up > *that* hypothetical shortfall, and attract those employees, HL need only > use some of its enormous cost savings to sweeten their salaries. (This is > presumably what the many large employers who do not provide plans will > do.) > > For all these reasons, it is difficult to imagine HL or CW --or, more to > the point, the average large employer -- being financially *worse off* if > it pays the assessment. (And again, there's no allegation of facts that > would alter that conclusion here, in any event.) > > _______________________________________________ > To post, send message to Religionlaw@lists.ucla.edu > To subscribe, unsubscribe, change options, or get password, see > http://lists.ucla.edu/cgi-bin/mailman/listinfo/religionlaw > > Please note that messages sent to this large list cannot be viewed as > private. Anyone can subscribe to the list and read messages that are > posted; people can read the Web archives; and list members can (rightly or > wrongly) forward the messages to others. >
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