As a result, it would significantly distort hiring decisions. Employers would have strong incentives to tilt hiring toward people who have a spouse with a good income (or have health coverage through a family member), teenagers whose parents make a decent living, and people without children (since Medicaid’s income limits and eligibility for the subsidies in the new health insurance exchanges increase with family size). Poor parents with children in one-earner families would be particularly disadvantaged.

While language could be included to try to ban such discriminatory effects, it would be virtually impossible to enforce effectively. It would be extremely difficult to prove in court that an employer has passed over one applicant and hired another because of the health surcharge that employers would face if they hired people receiving Medicaid or health insurance subsidies. Moreover, most low-income job applicants who do not get hired will not engage attorneys and initiate legal proceedings.

It's a case study of how policies that aim to provide universal coverage could intersect with racial and socioeconomic inequalities in other sectors, like job security, legal resources, everyday financial struggles of low-income households. (A recent analysis from the Joint Center examines the Senate proposal in the context of racial equity.)

The policy could also give employers more incentive to hire machines to do the job of lower-skilled workers, the CBPP argues (robots don't break as easily as humans and cost less to maintain).

One of the reasons the health care debate is growing so tense is the endemic irrationality of preserving the current employer-based insurance framework.

Reforming employers' role in health care is messy business. A compromise with employers must encourage their buy-in without backfiring and shortchanging poor workers even more.

In a TAP roundtable on the public option, Robert Kuttner explains just why tweaking a fundamentally broken system may be more politically and economically costly than a major overhaul:

Under the House leadership bill, people who have coverage through their employers are ineligible. So the proposed, head-to-head competition between the public plan and private competitors is left to employers, not individuals....

Politically, protecting the public option from industry mischief is no less a heavy lift than single-payer. It's a pity that all the progressive energy that's gone into defending the public option hasn't gone to advocate national health insurance.

In addressing the health care crisis, President Obama reminds us that the cost of doing nothing is scary. Yet the cost of doing the wrong thing at this point may be far worse, and fall on those who can least afford it.

UPDATE: new, cheaper version of the Senate HELP bill just released, with a modified employer mandate. Analyses here and here.

Image: Health care reform rally in Nashville (Nashville Scene)