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Chairman Bethel, members of the Senate Insurance and Labor Committee, my name is Kyle Jackson and I am the state director for the Georgia chapter of the National Federation of Independent Business (NFIB/Georgia). Thank you for the opportunity to be here today to provide testimony and a small-business perspective on the legislation pending before.
Before I get to comments, I want to commend Chairman Bethel and his predecessor Chairman Golden for their commitment to serious discussions on this important topic and their willingness to try and write a bill that is less harmful to the hard-working small employers and their employees that I have the privilege of representing.
For those of you I don’t know, let me quickly speak to NFIB/Georgia and who I represent. We are the nation and the state’s largest small business advocacy organization with over 7,500 small employers around Georgia and roughly 350,000 small businesses nationwide. We are a member-driven organization in that before we take a position on any piece of state or federal legislation we poll or survey our members as to make sure the organization always represents the true position of small business. To that end, on our 2015 NFIB member ballot, almost 90% of small employers opposed new or expanded health insurance mandates, hence our opposition to SB 1.
Our average member has less than 20 employees and does less than $1 million per year in gross sales. Our members are involved in just about every facet of our state’s economy, and while this broad and diverse membership has different issues and needs, the rising cost of health insurance is one which affects every NFIB member. It comes as no surprise then that nearly every member purchases their insurance in either the individual or small group market to which this bill and other bills like it tend to apply almost exclusively (due to a number of reasons).
Every four years, the NFIB Research Foundation conducts a nationwide survey of small employers asking them to rank, on a scale of 1-66 (one being the most important) the biggest challenges they face as small employers. Since 1986, the #1 response each time the survey was conducted has been the rising cost of health insurance, with a whopping 53% of respondents citing the issue as “critical” in our 2012 study. Over time we’ve also seen a noticeable decline in those small companies who can even afford to offer coverage. Small business has long been acutely aware and sensitive to the rising cost of health insurance, and while we don’t lay all of that blame at the foot of mandated state benefits, we believe there is certainly a portion of those cost increases being driven by said mandates.
Our general concern with mandates can really be put into three categories; the cost of mandates with respect to premium increases; erosion of the free market; and finally the equity or lack thereof as it relates to small business and the self-employed.
Each existing and proposed mandate has inherent cost; even the proponents will admit there will be some cost and premium increase as a result of passage of this bill. With greater access to care, comes greater utilization.
That isn’t to say there isn’t a very good medical and/or social reason for SB1. A sticking point of the mandate debate has long been over the issue of cost. Often times proponents produce studies saying a new proposed mandate may only add one or two percentage points to premiums or less in this case. Often the debate lacks credible cost projections altogether as it has proven difficult over the years to handicap and project cost metrics in a dynamic marketplace. The bottom line is that each mandate comes with a cost to policy holders.
Taken with annual double-digit premium increases small employers are facing, I urge you to not add an additional burden on small employers and their employees.
Another sticking point for my organization and small business is the complete lack of fairness in the mandate debate. Most bills that get introduced only apply to the individual or small group market. Self-insured plans are governed by the Employee Retirement Income Security Act (ERISA) and aren’t subject to state mandates. Many times bills don’t apply to the State Health Benefit Plan, so everybody who works for and purchases their insurance through state government is exempt. Union-negotiated benefit plans are also exempt as are Medicaid and Medicare. Who is left? Small employers, their employees and the self-employed, or roughly between 15-20% of the total population.
This is patently unfair to small business. Furthermore, when the General Assembly deems a mandated benefit to be in the public’s best interest by passing a piece of legislation, shouldn’t everybody be included? Credit to Governor Deal for putting money in the budget for the coverage of this issue for state employees and credit to those in the self-insured corporate world who have made this coverage a priority as well. But consider economies of scale here.
But let’s stop and think about cost and the ability to absorb cost increases. The state passes a roughly $20 billion budget each year, so a few million bucks isn’t that big of a hit. Look at the example of a self-insured Fortune 500 hardware company with roughly $80 billion in annual revenues that made the decision to cover ABA therapy. Again probably not a significant cost in the grand scheme.
Now let’s look at a small family-owned hardware that buys coverage in the small-group marketplace and has had a hard time obtaining “affordable” coverage, even in the Shangri-La of the post-Affordable Care Act world. Chances are they’ve seen healthcare costs eat up a larger and larger chunk of annual revenues, making it harder to make ends meet while still offering coverage to their employees. They don’t deal in the billions, they deal in the thousands, and few hundred bucks or a couple thousand here and there make things very difficult because they can’t just absorb costs as easily.
So when you vote today, and when this bill comes to the floor, I implore you to think long and hard about those small employers in your districts and the daily, monthly and yearly struggle to keep up with health insurance premium increases. The last thing they need is for new mandates to be passed along in the form of higher premiums. Some of them may just decide to opt-out of employer-sponsored insurance altogether.
On behalf of my membership I thank you for the opportunity to be here today and again credit to the chairman for the manner in which he has handled this difficult issue.
