I don't understand this Ezra Klein's explanation of the Baucus bill's "free rider" provision, which seems hideously misguided because it attempts to penalize employers who hire low income workers eligible for health insurance subsidies. Here's Klein:

The penalty itself is a bit confusing, and if anything, even worse than one might imagine: The employer will pay the lesser of A) the average subsidy in the exchange times the number of subsidized workers or B) $400 times the total number of workers. Two examples should clarify this:

Baucus Corp has 100 employees and does not offer health-care coverage. Thirty of the employees receive subsidies on the exchange. The average subsidy that year is $5,000. Baucus Corp woulds pay $400 times 100 employees, as $40,000 is less than $150,000 ($5,000 times 30 employees). Each of those low-income employees is costing Baucus Corp $1,333 more than an employee who didn't need subsidies.

Now imagine that Baucus Corp. only has five employees who need subsidies, and the average subsidy that year is $5,000. In that scenario, Baucus Corp would pay $25,000 rather than $40,000, because $25,000 is less than $40,000. Each low-income worker now costs Baucus Corp. $5,000 more than a worker who doesn't need subsidies.

The problem is the highlighted sentence: It sure looks as if Baucus Corp would pay the same $40,000 penalty if it had only 29 low income employees in its workforce instead of 30. Hiring an additional low income employee, as opposed to a more affluent employee, costs it nothing, not $1,3000.   (Indeed, the penalty on Baucus Corp. is the same- -$40,000--regardless of the number of low income employees in its work force unless that number is less than 8, at which point the number of low income employees X $5,000 would be the lower of the two penalties,)

If this reading is right, the provision, while still misguided, may be less misguided than it seems (not more, as Klein implies). For firms with a sizable proportion of low income workers, it would basically function as a straight pay or play tax that increased a fixed amount (in this example, $400) with every new employee hired, whether or not that employee had a low income that qualified him for a health subsidy. The perverse effect would be to encourage firms to either decide to hire lots of low income workers or to hire none of them, concentrating the low income workforce in a relatively few firms. That's crazy, but it's slightly less evil than discouraging hiring of low income workers across the board.

But I could have it wrong. I am getting my information from Ezra Klein! He has great sources, but he's an unreliable narrator. It must be frustrating for the sources. ...   2:46 P.M.

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54-46 Was My Number, But It's Not Dick Morris': I was thinking that even a smallish majority opposed to health care might be sufficient to bog it down in Congress, as skittish legislative swing votes worry about their own reelections. But health care reform foe Dick Morris seems to believe the numbers aren't quite bad enough (yet) to have that effect.

But, certainly, when opposition to the president's program grows from the current 42-55 disapproval into the 35-65 range, Congress must balk rather than march over the cliff.

It's not clear we'll ever get into the 35-65 range, unless Obama appoints Kanye West as his new spokesman. If that's what it will take for a reform to not pass, then a reform will probably pass. Hope!   3:21 P.M.

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