09/02/2008
Health insurance
In the wake of the Legislature's adoption of quarterly reporting (increasing employers' paperwork burden and the number of companies liable for the fee) and the raid on the employer funded Medical Security Trust Fund to pay for health insurance reform, the administration will hold a hearing on new regulatory changes that are designed to collect $30 million more from the state's employers and are due to take effect on Oct. 1.
On Friday, Sept. 5, a hearing at Gardner Auditorium in the state House will be held on a proposed regulatory change that will expand the applicability of the $295 annual "fair share" fee to thousands of additional employers, many of whom already offer health insurance to their employees. Currently, employers avoid the $295 annual "fair share" fee IF 25 percent of their full-time employees participate in their health plan OR the employer's plan pays 33 percent of the premium. The proposed rules would require employers to satisfy both tests beginning Oct. 1 to avoid the fee. The regulatory changes would also allow implementation of quarterly employer filing and quarterly collection of fees. Employers of part-time and seasonal employees, especially in the tourism, food service and retail industries, would be particularly affected. Any employer who wishes to testify at the hearing should contact NFIB immediately. We also encourage written testimony.
On Tuesday, Sept. 9, a hearing will be held before the Connector Authority to clarify "minimum creditable coverage" defining the minimum coverage required to satisfy the state's health insurance mandate for individuals. We are concerned that advocates will push to include expensive healthcare mandates, many of which the legislature rejected, in the most basic policies, thus further increasing the cost of health insurance for employers and their employees and families. In addition, new mandates would reduce the flexibility of employers to offer the health coverage that their employees want. Again, we encourage contacting your legislator, the governor and the lieutenant governor about how the cost of health insurance is affecting your business and your workers' bottom line.
Dairy farms
Gov. Deval Patrick has signed legislation that provides tax credits for dairy farmers when federally regulated prices do not cover expenses; gives state subsidized loans for dairy farmers; creates a new board to promote the dairy industry, and provides a mechanism for municipalities to opt our of charging farmers a tax on their machinery, equipment and animals. There are less than 200 dairy farms remaining in Massachusetts.
Legislative session review: Spending
Most business and watchdog groups are alarmed by the level of spending by the 2007-08 legislative session. While state officials repeatedly warned about the future level of state revenues, authorized and actual spending continued unabated throughout the session, seemingly with little concern for those stated concerns. Now there is talk from legislative leaders about the possibility of a special late fall session to address budget issues that were already addressed less than two months ago.
The Legislature passed a $28.2 billion budget for FY 09 in July. But, even growing revenue projections are $400 million short and additional demands for services, particularly healthcare, may put the budget more than $1 billion in the red by June 30. More than half of the 6.7 percent increase in tax receipts for July was attributed to a one-time $80 million corporate tax settlement. And revenues from capital gains taxes, notoriously volatile, are expected to drop significantly in the months ahead. In addition the state is still trying to negotiate a healthcare waiver with the federal government that would continue the flow of $600 million annually to help cover costs connected with implementation of the 2006 healthcare law. State policymakers may have seriously overestimated increased revenues from corporate tax changes and especially the cigarette tax increase -- similar to the overestimation of income from employer penalties on health insurance ($9 million instead of a projected $45 million). Tapping the state's rainy-day account of $2.3 billion may delay the day of reckoning, but current spending levels cannot be maintained -- even in an overheated state economy -- which we definitely do not currently enjoy.
Capital spending is also a serious long-term problem. Although the state has a cap on annual spending on capital projects -- $2 billion per year -- the 2007-8 legislative session authorized the state to borrow and spend $15 billion for capital improvement projects for state colleges and universities, state parks and recreation areas, transportation projects, roads and bridges, and general government projects, not including $1 billion each for support, promotion, and tax benefits for the biotech and movie industries in the state. The governor retains wide discretion in spending on capital projects and could refuse to fund projects, but the real need to address neglected areas and the political pressure to begin building "approved" projects will be great.
The bottom line is that the Legislature and the administration face a long term need to demonstrate serious budgetary restraint that has been sorely lacking to date.
