A centerpiece of the Senate’s healthcare reform legislation is the creation of health insurance mandates. These provisions require employers with over a certain number of employees to either provide a health insurance plan to their staff or pay a fine. Under the current system, a majority of Americans receive health insurance through the firm they work for; reform in both the House of Representatives and the Senate includes federal subsidies to allow others to buy a health insurance plan themselves. Democratic legislators had to balance their goal of insuring as much of the country as possible with minimizing costs. In order to do so, they had to ensure that companies wouldn’t take advantage of the subsidized health insurance exchange markets and drop their existing coverage.

However, those crafting the bills have acknowledged that many small businesses are unable to afford a group health insurance plan for their workforce. Many of these businesses do not currently provide insurance. Therefore, businesses with under 50 employees are exempt from the $750 excise tax. This tax would otherwise be levied on a per-employee basis, if any full-time worker who used a federal subsidy to buy a health insurance plan. Right before the Senate version passed, a new exception was added into the mix.

Oregon Democrat Jeff Merkley proposed an addition to protect construction workers. In the construction industry, the majority of firms are smaller than the general threshold: 90 percent of them employ fewer than 20 people. Merkley’s provision limits the exemption for the industry to businesses with under five employees. Contractors who use union labor, regardless of their size, must often spend anywhere from 12.5% to 20% of payroll on a health insurance plan for their workers. Meanwhile, non-union contractors have the option of forgoing health insurance–this allows them to low-ball bids, which supporters of the exception claim will result in an unfair competitive advantage. Employees with the latter firms would have gone uninsured in the past, whereas now the federal government would pick up the tab for subsidizing their health care.

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