Insurance Committee proposing health care tax on employers

(Feb. 22, 2008) The legislature’s Insurance Committee is proposing several bills that are troubling to the state’s business community because the measures would increase health care costs and in the process make health insurance less affordable and less accessible in Connecticut.

Most disturbing is the apparent return of a proposal to hit employers with a “play or pay” tax. Previous “play or pay” proposals in Connecticut have essentially meant creating a tax on employers for any of their employees who do not have health insurance meeting standards set by the state.

While the language of the current proposal is still being crafted, the Insurance Committee’s co-chair described it as being similar to an ordinance passed in San Francisco that is currently being challenged in federal court.

The San Francisco ordinance took effect Jan. 1 and requires employers with 20 or more workers to spend a certain amount on health coverage or put that money into a city fund – becoming, in effect, a tax.

But when Maryland enacted a similar tax, it was struck down by a federal court which said the measure was pre-empted by the federal Employee Retirement Income and Security Act of 1974 (ERISA).

It appears that under the Insurance Committee’s bill, employers would be subject to a $1.25 per hour per employee charge to the state to pay for health care. CBIA will provide more details as the bill is released by the committee.

More mandates
Among other bills being proposed by the committee are a series of new and expanded health insurance mandates, including those for bone marrow testing, hearing aids for children, prosthetics, and treatment for autism, Epidermolysis Bullosa and Lymphedema.

Connecticut currently ranks third in the nation in terms of overall number of government-imposed health care mandates and each of these mandates affects the cost of health insurance premiums. According to the Council for Affordable Health Insurance, the accumulation of mandates can increase premiums by as much as 65%.

CBIA continues to ask legislators not to adopt any new mandates or other measures that would drive up health care costs in Connecticut.

For more information, contact CBIA’s Eric George at 860-244-1921 or eric.george@cbia.com.