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The Beacon Hill Report - March, 6, 2014

Date: March 05, 2014

Small Business Owners’ Message to Legislators: UI Freeze NOW

The National Federation of Independent Business is urging all small business owners to contact their elected officials requesting they vote to freeze unemployment insurance (UI) rates.

Legislators need to vote now to prevent a costly and unnecessary 33% automatic UI tax rate increase (that took effect on January 1) which will cost MA employers nearly $500 million. Massachusetts’ UI costs are already amount the highest in the country. And the state’s UI trust fund has a more than sufficient balance to pay benefits to all unemployed workers without a tax increase.   

Actually both houses approved the rate freeze earlier this year, but in separate bills. The House of Representatives voted in favor of a UI rate freeze on February 12 as part of a supplemental budget. The Senate passed a similar rate freeze on February 6 as part of a comprehensive UI package. The House and Senate are now arguing over which vehicle to use to freeze UI rates while the state’s small business owners risk paying a significant price associated as a result of a delay.

NFIB has advocated strongly for broader UI reforms but legislators must act now to simply freeze 2014 rates and prevent half a billion dollars from being needlessly removed from the economy.

We urge you to contact your elected officials and tell them to pass an unemployment insurance rate freeze today before bills start hitting mail boxes of small business owners later in March.   

Despite Obamacare’s limits on expansion of “essential benefits”, legislative proposals to add to the state’s list of health care mandates continue to be filed. NFIB testified before the Joint Committee on Financial Services about the high cost of health care in MA – perhaps the highest in the world -- and the need to focus on public policies to lower those costs, not increase them in a state that already has high costs for employers in the areas of energy, development, taxes, unemployment insurance, and employee salaries and benefits.  

While the new federal health care law will actually increase costs for many small businesses and add more complicated regulations and costly mandates, the health care mandate proposals would further drive up the costs of health insurance for every small business owner and for every person who works in a small business.

The high costs for business owners are reflected in our state’s continuing frustratingly slow job growth over the past decade or more, particularly in the small business sector which has traditionally been the state’s job incubator, and in our state’s recently rising unemployment rate. Small business owners are not a bottomless pit.  Now is not the time to impose a new mandate of higher health care costs on employers and on employees – a mandate that will make the state less economically competitive and take more money out of the paychecks of working consumers.

More than a year ago, several business groups warned the Governor and legislative leaders about the costs of new mandates under the Affordable Care Act. “Beginning in calendar 2014, the ACA will assess states for costs associated with any new and recent mandated health benefit laws. While the ACA permits states to mandate benefits for qualified plans, it requires the state to assume the cost of any additional services by defraying the cost of those benefits. As a result, if the state passes a law to require coverage of a certain benefit and the benefit is neither considered by the federal government to be an “essential health benefit” (EHB) nor included with the state’s benchmark plan for qualified health plans (QHPs), the state will be responsible for paying for such claims under private plans in the Connector.” All state-required benefits, like those in the various well-intentioned bills that are the subject of the hearing, are not included in the state’s benchmark plan and would not be considered EHB for 2014 or 2015. The fiscal impact on the state’s budget of any additional mandates passed during this session is significant. The fiscal impact on Massachusetts small businesses is also significant.

At the minimum, new mandate bills should be reviewed by the administration to determine the actual cost. The costs, whatever the determination, associated with these expanded health care mandate proposals will disproportionately affect small businesses. These proposals will not apply to large companies, which typically “self-insure” and are governed by the Federal Employee Retirement Income Security Act (ERISA). And the share of costs paid by small businesses and the 1.5 million workers employed in small businesses in Massachusetts will grow even larger as bigger businesses choose self-insurance.   

Because of the disparate impact of health care mandates on smaller businesses and because of the budgetary implications caused by additional health care mandates under federal health care law, the health care mandate proposals should be set aside.  

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