04 Apr Collecting payroll data for gov care?
By Greg Dattilo, CEBS and Dave Racer, MLitt
Recently, employers were surprised and frustrated by a new government-required mandate regarding health insurance premium reporting.
Employers had received a notice requiring them to report insurance premium cost data to their insurance companies. The insurance companies, employers were told, would then report this data to the federal government.
Specifically, the notice ordered employers to report the shared annual cost of health insurance premium that the employer paid and the annual amount the employee paid for 2020 and 2021. The order mandates employers to report 2022 amounts by June 1, 2023. The reporting will go on forever unless Congress changes the law.
Ironically, the law that requires collecting this data was mostly about price transparency for prescription drugs. The connection between and purpose for requiring more drug price transparency and collecting medical insurance premium data is suspect.
The Affordable Care Act of 2010 already requires insurance companies to report all claims data to state officials. This claims data specifically must be separated by categories — prescriptions, hospital, imaging, lab expenses, clinical costs, and several other categories. The states must forward that data to the federal government. So already, the federal government knows how much claims cost by state – including prescription drug costs.
Why is the federal government now requiring employers to report this insurance premium data when it already has all this other claims data? The federal government can use this data to determine what percent of income employers and employees pay for their health insurance benefits. This opens the door to replace private health insurance with a federal government-run health care system. In what way?
A rationale for collecting the data
Government-run health care has been a common goal for many activists for decades. Better known as single payer health care, its supporters are quite taken by the German national health care system as a model.
Presently, about 87 percent of German citizens receive their health care from German Sickness Funds. Germans pay for their health care through an employer/employee payroll tax. Today, the tax rate is 14.6 percent. Employees and employers each pay 7.3 percent of the employee’s gross wages. There is also an additional shared payroll tax for Long Term Care Insurance of 3.05 percent, and another assessment that is income-dependent.
It turns out that Germany’s employers and employees share equally about 17.55 percent (or more) of their income to pay for their “free” government-run medical care.[i] In other words, 8.77 percent each.
Nearly 30 years ago, the United States was hotly debating the 1993 Health Security Act which became known as HillaryCare. The employer/employee tax proposed in that Act totaled 15.4 percent,[ii] based on the same funding theory as the German system and almost the same amount. In other words, 7.7 percent each.
Today, the U.S. government is collecting health insurance premium data to calculate what employers and employees are currently paying. This will make it easier for the federal government to justify moving the U.S. into a government-run health care system paid through payroll taxes.
