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COPYRIGHT 2001 Thomson Financial Inc.
If the amount of talk about a subject is a gauge of whether it has legs, the idea of expanding health coverage by the use of tax credits may be an idea whose time has come. And while offering credits to workers to help them pay premiums is the plan getting the most play, some policymakers gravitate toward offering credits to small businesses instead to entice them to offer coverage.
However, some recent analyses suggest that this tactic doesn't bear a lot of fruit.
Among other drawbacks, top Heritage Foundation health analyst Stuart Butler notes that "it is administratively costly and inefficient for small employers to try to sponsor health plans." Overhead costs can amount to more than 30 percent of the cost of premiums for businesses with fewer then 10 workers, according to the Congressional Budget Office. That's compared to overhead of around 12 percent for firms with 500 employees or more.
In addition, small employers can rarely offer workers a choice of plans, says Butler. That means the coverage isn't of much use when it comes to what market-oriented economists call the pivotal factor in creating a higher-quality, more cost-efficient health care system: consumer choice. If workers can't choose the plans they...
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