As far as people setting up phony companies I have two thoughts: First, under the contracts today, which would not be changed by this proposal, companies can only insure genuine employees. The insurance companies have the right to audit payroll records, etc. to make sure only employees are covered. So although people could set up companies for this purpose if they really are totally phony, they have pretty significant difficulties and expenses such as payroll taxes to deal with. Second, so what? People set up small businesses all the time because they or their family members are unemployed and need money and when they do so we praise their entrepreneurial spirit. Why is it any less acceptable to start a business because that is a good way to get health insurance?
Good point - I was thinking in terms of "real" because we'd have to make enough for everyone to help cover their insurance payments! Hmmmm, now for a great business idea...