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Insurance Reform in Texas

Author: R Stell

Insurance Reform

Health-care mandates
Every time a new health-insurance mandate is imposed on health plans, the cost of that mandated benefit must be passed on to consumers and business owners in the form of increased premiums. Lawmakers should remember that insurance companies do not fund new mandates -- their cost is borne by the men and women who struggle each day to pay the premiums.

When premiums are too high, many Texans are forced to go without health insurance or are forced to underinsure thereby exposing themselves to unnecessary risk. Texans want health insurance that is reliable and affordable. To keep costs down, the Texas Legislature should impose a moratorium on all new health insurance mandates.

Health insurance co-ops
NFIB/Texas salutes recent legislation authorizing health insurance cooperatives, which was passed in order to allow small employers the ability to band together within the state to purchase health insurance collectively. Small businesses would benefit from a larger "risk pool" allowing them to achieve volume discounts. 

We face a health care crisis in Texas. Too many Texans are uninsured and many of these uninsured are working. Small businesses will do their share to help address this crisis if they can find reasonably priced health insurance options. Lawmakers should continue to reform the law establishing health insurance cooperatives and establish a co-op health program that offers real alternatives and real savings for Texas employers.

The market for health insurance cooperatives must be expanded and given the proper environment in which to flourish. It is imperative that the Texas Legislature enact meaningful legislation to encourage the growth of this product for small-business owners.

Unemployment insurance
Small-business owners face many burdens when working with our state's unemployment system. Abuse by workers and complicated regulations make the system frustrating and time-consuming. Employers many times feel helpless in a system where the cards seem to be stacked against them when they see their rates rise while terminated employees collect benefits unfairly.

Several changes in the law could help improve the system for employers and employees alike. One change would permit employers to establish a brief probationary or trial employment period during which new employees who prove to be unsatisfactory performers could be released without endangering the employer's tax rate.

The Texas Legislature should seek to enact legislation that will allow for the efficient collection of unemployment benefits paid erroneously or in an amount exceeding the allowable benefit. The Texas Workforce Commission should be granted the power to recover any and all overpayments, regardless of how they arise, including the use of private collection agencies in their efforts. 

Legislation should be enacted into law that would make the waiting week noncompensable. Current law requires payment of the waiting week claim after three weeks of unemployment benefits are paid, thus giving displaced workers an incentive to remain unemployed for four weeks in order to collect a double payment in their fourth idle week.

Another important change would close an existing loophole that shifts the burden to employers who are not involved in a claim. Some workers who are fired for cause will create a new separation before filing an unemployment claim by performing some type of odd job for a friend, relative, or third party. Once the short-term job ends, the worker can file a successful claim for benefits. The benefits that are paid out cannot be charged to the friend because they are not an employer. Likewise, that last true employer is not liable because it released the claimant for disqualifying reasons. The cost of benefits is then charged to the Trust Fund and thereby socialized across the accounts of all Texas employers. We should change the law to require claimants to name legitimate employers that are financially involved in the unemployment insurance system as their last work on unemployment claims.

Further, changes are necessary to more closely tie a worker's eligibility for benefits to his reasons for leaving his prior jobs. Under the current system, the employers responsible for reimbursing the system for benefit payments are those during the "first four of the five completed calendar quarters proceeding the quarter in which the claim is filed." Employers from whom the worker was fired for misconduct or voluntarily left for personal reasons can have their accounts protected from charge, meaning that the costs of those benefits are socialized across the base of all employers. Instead of socializing those costs, a better system would not allow the claimant to use those wages in determining whether he had enough work history to qualify monetarily for benefits. It would then also incorporate the current system's prerequisite that the worker have lost his last work through no fault of his own before paying any benefits.

Additionally, legislation that will encourage employees to seriously seek employment rather than fully utilizing their benefit eligibility will cut costs and make the system a "helping hand and not a handout." Today, beneficiaries frequently run out their benefits before actively seeking and finding re-employment. According to a report of the Government Accountability Office issued in March, 2006, unemployment insurance-eligible workers who apply for unemployment insurance benefits during a period of unemployment remain unemployed for about 21 weeks on average, whereas other similar workers who do not receive unemployment insurance remain unemployed for about 8 weeks. The same report noted that the likelihood of receiving unemployment insurance benefits peaks at age 25. It is a shame that our youngest, most recently educated workers are oriented so early into the workforce with the experience of being paid for not working, instead of being paid for working. During a time of economic expansion, with an economy flush with jobs, the work search requirements should be demanding and stringent, not a meek, pro forma act on the claimant's part. There is simply no excuse for the average unemployment insurance claimant to be drawing benefits for an average of 14 to 15 weeks (the current duration) before going back to work. The fact that this phenomenon is common, regardless of locale or the local unemployment rate, indicates that the system does not adequately encourage benefit recipients to find work quickly. While the Texas Workforce Commission did implement a "work search" rule in 2003 requiring claimants to make three work search contacts per week, most employers feel this number is insufficient and that a worker receiving unemployment benefits should treat his search for work as a full-time job.
 
In general, for the state and nation to compete on a global level, we need every qualified, skilled worker engaged in the workforce. For every two workers exiting the workforce, only one is entering the workforce. The combination of claimants ineffectively/meekly engaging with employers, and employers being burdened with the resulting taxes, creates a spiral of challenge for businesses. Businesses will either die from the burden of taxes, or will move elsewhere -- whether that is another state or even another nation. Lawmakers should continue to work toward an unemployment system that provides a "safety net" for workers while protecting employers from fraud and unnecessary costs.

On the 2007 NFIB/Texas ballot, an overwhelming 82 percent of small-business owners voted to support these necessary reforms to the state unemployment insurance system.

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