The Rise of Single-Administrator Health Care?

David Frum made an observation on one of the potential bits of fallout from the House health insurance reform bill, assuming it survives into law:

Small employers can now escape the obligation to provide health care for their employees by paying an 8% payroll tax. Many small employers will seize that offer. Their employees will have to go shopping for themselves in a very complicated and confusing marketplace. Many will opt for the seeming security of the government-run plan. Over time, the public option will grow, setting private insurance on the road to extinction – or at best to a tightly regulated new role as the health equivalent of public utilities. The big decisions will be made in Washington; the insurers will comply.

At any rate, that’s the House leadership’s hope: not a single payer, exactly, but a single administrator.

Since I read about the payroll tax option, I’ve suspected this could lead to an economic disincentive for employers to provide health insurance as part of an employee benefits package.  Seeing Frum’s article finally motivated me to grab an envelope and do some calculations:

(Hovering over a number should explain the assumption I’ve made.)

Those figures are very, very rough, and I haven’t done justice to the complexities involved in the pros/cons of an employer deciding to offer a health insurance benefit, the wide range of possible salaries, etc.

However, accepting that those numbers above are extremely rough and SWAGgish…I can easily accept the notion that a non-trivial number of employers will find an economic incentive to push employees into the new exchanges and the public option.