The other week I blogged about how whatever version of Congress's health plan passes, it is likely to include a mandate for employers to provide health insurance for their employees. Small-business groups are up in arms because while there will be exemptions for small businesses, they say these exceptions don't go far enough.
So just how many businesses would have to provide health insurance, or pay penalties?
The answer depends on which bill we are talking about. The House and Senate versions have different exceptions. (Note: these are the Democratic bills; the Republican bill does not have mandates.)
Let's start with the House version, which exempts businesses with annual payrolls under $250,000. The Census Bureau's U.S. Business Statistics data are somewhat of a lagging measure. The most recent data on business sizes come from 2006. The data on number of firms with different payroll sizes are not available online, but Lori Bowan of the Census Bureau sent me data from 2006.
That year, the Census counted just over 6 million employer firms in the US (i.e., firms that actually have employees and are not just one-person shops.) Of those, 1,376,285 had annual payrolls over $249,000. That's nearly one quarter of all employer firms—pretty significant. Things change when we look at the version of the bill that passed a Senate committee.
The Senate committee exempts businesses based on number of employees, not payroll. Businesses with less than 25 employees are exempt. In 2006, the Census found 509,354 employer firms with over 25 employees (check out data here). So that means only 8.5 percent of businesses with employees would be mandated to buy health insurance under this plan.
So the House bill has a significantly broader mandate than the Senate bill. That can be good or bad, depending on how you look at it.
Another interesting thing to note is that even though we're talking about a minority of firms falling under the mandate in either case, we are still talking about the vast majority of employees. The Census data show that over 87 percent of all employees of firms in the US work for a firm with over $249,000 in payroll. Similarly, almost 80 percent work at firms with over 25 employees. So while the number of businesses who would be forced to pay health insurance is far from paltry, one could argue that the number of workers these plans could help is even more important.