10/04/2005
Mr. Chairman and members of the Senate Insurance, Commerce and Labor Committee:
My name is Herman Harrison. I am president of Foster Transformer Company based out of Cincinnati, Ohio. I am here today to testify in opposition to Senate Bill 113 and other efforts by the Ohio General Assembly to mandate health insurance coverage. I want to thank you for the opportunity to appear before this committee today.
Foster Transformer has long history of service and employment in the Cincinnati area dating back to its establishment in 1937. Foster Transformer is recognized as one of the world's most respected transformer manufacturers. We currently have more than 16,000 different custom and standard transformer, inductor, solenoid and power supply designs that are widely utilized in numerous industries throughout Ohio.
At our highest point of production in the 1960s, Foster Transformer employed over 500 people and operated two facilities. As the climate for manufacturing in this state has continued to decline, and competitors in other states and overseas were able to capitalize on more business-friendly environments, Foster’s employment has now dipped to below 50. Of those 50, many of the employees are recruited through halfway homes and rehabilitation facilities whereby we give those unskilled and underprivileged people the opportunity to learn a skill and hold a steady job.
While some members of this committee may be very supportive of the concept of a diabetes mandate or other types of mandated coverage, I was hoping to give you a glimpse of at least one employer’s struggle in providing any type of health insurance coverage at all. During the decade of the ‘60s, Foster Transformer paid 100 percent of health insurance costs for each of our employees. Since that time, we have found it increasingly difficult to provide our employees with affordable coverage. For example, we now are only able to pay 50 percent of the costs of our employees’ health insurance. The employee pays for the other half. Given the 18-22 percent percent annual increase in health insurance costs our company and employees have faced in the last five years, I have found that a much higher percentage of our workers are opting not to purchase the coverage we provide, instead adding to the ranks of Ohio’s uninsured.
As an employer who frequently discusses benefit options and health insurance costs with my employees, I have become increasingly frustrated with the General Assembly’s efforts to further restrict the ability for my employees and I to purchase coverage that benefits Foster Transformer’s employees and their families. Mandated coverage such as Senate Bill 113, force employers like me to either increase the out-of-pocket expenses my employees pay, or reduce benefits elsewhere. For instance, our insurance plan currently covers both dental care and vision care. Should my health-care costs continue to rise, driven further by these mandates, I may be forced to cut dental and/or vision coverage’s out of our health insurance plans.
While the burden of this and other mandates fall squarely on the backs of small business, it is our employees who also face the repercussions. In addition to the possibility of eliminating other coverage (i.e. dental, vision, etc.), this type of mandated coverage forces Foster Transformer to increase the cost of health insurance for our employees. If you recall earlier in my testimony I explained that Foster currently pays 50 percent of the health insurance costs, and asks its employees to assume responsibility for the remaining 50 percent. Under our current plan, family coverage averages nearly $11,500.00 per year. Many of our employees simply cannot afford the coverage we currently provide. As small business looks to legislators in Ohio and Washington, D.C. for creative solutions to our health-care crisis, the response so far has been to reduce flexibility and increase costs via a call for mandated benefits.
In addition to the cost aspect, mandates unfairly target companies like Foster Transformer. While government and big-business plans are exempt, the legislature continues to look at small business as the group who should bare responsibility for funding this health insurance coverage. As Ohio’s leaders have and continue to pursue tax, workers’ compensation and regulatory policy reforms to make Ohio’s businesses more competitive in both the national and international market, health insurance mandates counter-productive to these “job creation” efforts.
Mr. Chairman and members of the committee, I appreciate the opportunity to be here and testify before the legislature. I would like to leave you with a thought. As you continue to debate this issue, please take into consideration that this type of legislation will make it more difficult for small-business owners like me to continue offering health insurance coverage to my employees. Thank you for your time and consideration. I would be happy to answer questions you have at this time.
