04/ 03/ 2007
by Shannon McRae
NFIB plays key role in state health-insurance reform proposals
Tired of the lack of action at the federal level, several state legislatures are taking up the health- insurance issue themselves. Many states are concerned the federal government can't solve this problem, and state lawmakers prefer to decide how to fix the problem themselves. While some state plans seem to address many of the problems, there is no one-size-fits-all solution. What works in one area of the country isn't guaranteed to work somewhere else. NFIB has been actively participating in the debates in these states and others:
California
Gov. Arnold Schwarzenegger has called for major reforms to California's health-insurance system by supporting a mandate that would require all individuals to obtain coverage. His plan, which is expected to cost $12 billion in the first year alone, would be funded through a combination of taxes on individuals, employers, providers, hospitals and state, federal and county governments. Businesses with 10 or more employees that do not offer health insurance would be required to pay a 4 percent payroll tax to subsidize health-care coverage. Approximately 7.5 percent of businesses in California would be subject to the tax.
NFIB is concerned that the costs will far exceed the current funding. In recent years, California's payroll has risen at just half the rate of its health-care costs. Business owners worry that if costs continue rising at such a pace, the 4 percent payroll fee will not be enough, and lawmakers will place future tax increases on businesses. While NFIB supports increasing availability and affordability of heath care, we oppose plans that leave small businesses footing a bill that is bound to continue growing if nothing is done to truly address the increasing cost of health care.
Illinois
Small-business owners in Illinois are concerned over Gov. Rod Blagojevich's health-insurance reform plan. Under his plan, all uninsured individuals who make at least 400 percent above the federal poverty line (about $80,000 for a family of four) would be required to purchase insurance. Expanded state and federal programs would provide coverage for all children, low-income individuals and all immigrants, both documented and undocumented. To pay for the programs, the governor supports a payroll tax on businesses (4.7 percent on those with fewer than 10 employees, and 2 percent on those with more than 1,000). Businesses would be subject to the tax unless 75 percent of all full-time workers were already insured.
The ultimate goal of this "pay-or- play" plan is to require employers to spend 8 percent of their payroll on health care. Opponents argue that in order to pay the taxes, business owners will have to take money from profits, wage increases and employee bonuses. In some cases, businesses might find it more profitable to pay the tax rather than offer insurance, which means public dollars would have to subsidize those who drop coverage altogether.
Massachusetts During the past few years, NFIB has worked closely with former Gov. Mitt Romney to pass meaningful reform that provides coverage to the state's uninsured, most of whom work in small businesses. Though the Massachusetts House and Senate passed differing pieces of legislation in the past, Gov. Romney was successful in negotiating a compromise requiring all individuals to obtain health insurance. Businesses with 11 employees or more that do not provide insurance will be assessed up to $295 per employee per year. The plan, which takes effect July 1, uses a connector to help individuals find health insurance. State officials are still working out final details and reviewing proposals offered by insurers that will offer health-insurance plans through the connector. No costs for those plans or coverage parameters have been finalized, and much work remains.
Pennsylvania
Earlier this year, Gov. Edward Rendell announced his Cover All Pennsylvanians plan to offer basic health insurance to small-business employers with 50 or fewer employees and uninsured adults through the private insurance market. Taxpayers and individuals would pay for the cost of the plan, with businesses paying approximately $130 per employee per month. Businesses that don't insure employees would pay a "fair share" tax. The governor's plan would take effect in January 2008. During the first year, small businesses with fewer than 50 employees would be exempt from the assessment.
