Small Businesses: Mandates, Fees ‘Hurt Employees, Cripple Hiring’

Issues & Policies

Rising healthcare costs affect everyone—especially Connecticut’s employers and the employees they support with a range of benefits, including health insurance.
CBIA member companies, including small businesses, testified Feb. 23 before the legislature’s Insurance and Real Estate Committee in support of two bills—SB 544 and HB 7042—that address rising healthcare costs.

Dri-Air's Charlie Sears and Thomaston Bank's Rebecca Kayfus

Dri-Air Industries’ Charlie Sears and Thomaston Savings Bank’s Rebecca Kayfus urged legislators to support two bills that address rising healthcare costs.

Charlie Sears, president of East Windsor-based Dri-Air Industries Inc., said it’s important for his company to provide affordable, comprehensive healthcare for their 24 employees by paying 85% of their premiums.
But over the last five years, Sears testified, Dri-Air’s healthcare costs have ballooned over 27%—more than $55,000 a year, an average of $11,350 per employee.
“Our health insurance cost is our-third-largest expense and the only cost that we have no control over,” Sears said.
“We compete in both national and international marketplaces, where our competitors are all located in lower-cost locations.
“Each new mandate creates an increase in our expenses, making us less competitive and restricting our growth.”

Access Health Fees

SB 544 establishes a new procedure to set some checks and balances in place if Access Health, the state’s health insurance exchange, wants to increases the fees it levies on insurance premiums.
Currently, Access Health charges health insurance companies an assessment based on their business in the fully insured and dental market. These assessments help pay for the state-run exchange’s operations.
The 1.65% premium assessment may seem small, but it’s really not, said Rebecca Kayfus, vice president for human resources at Thomaston Savings Bank.
The premium costs the bank nearly $32,000 year—equal to the salary and benefits of a full-time teller, she said.

Thomaston Savings Bank's Rebecca Kayfus

Not only are current employees harmed by the added expense, the bank’s hiring ability is also crippled.

“Not only are the current employees harmed by the added expense, the bank’s hiring ability is also crippled,” Kayfus said.
“This is counterproductive to the goals of Connecticut.”
CBIA Counsel Jennifer Herz said healthcare costs are a concern to every business in Connecticut, particularly small businesses.
“Connecticut’s employers contribute to their employees’ premiums. But rising premiums make it more difficult for employers to fund healthcare," she said.
"At the same time, employers value the contributions of healthy employees because it means a productive, innovative workforce.
“CBIA supports SB 544 and HB 7042 because both bills are a step in the right direction for the state to do what it can control healthcare costs for small employers while continuing to focus on quality.”

Access Health Oversight

The Access Health board of directors has the power to set this assessment by a majority vote.
But other than Lt. Gov. Wyman, who chairs the board, all members are private citizens, including non-elected state officials.
Federal funding for the Affordable Care Act is almost depleted and there's growing uncertainty whether new federal funds will be available to support it or the state-based exchanges.
SB 544 provides for an elected body—such as the legislature’s Insurance Committee—to review any assessment increases, allowing for better oversight and public accountability.
“It’s important that our state’s health insurance exchange require legislative approval before increasing fees and assessments,” John F. O’Connell Jr., president of Hartford's C.M. Smith Agency told lawmakers.

The state exchange's current fee represents a 22% increase and equals about $97 per year per person, or $277 for a family of four.

"This bill is not about changing the power of the exchange to have an assessment but rather sets checks and balances on future increases of the assessment, since it is passed along to our members and their employees in the form of higher premiums."
All businesses in the fully insured market are subject to the fee, not just those that use Access Health. That means employers and workers who don’t use the exchange must still pay for it.
“Anything that can help ease these burdens is more than welcome, especially when many of these same folks who are paying the fees do not participate in the state’s health insurance exchange,” O’Connell said.
The current fee of 1.65% of premium represents a 22% increase from the initial assessment, and equates to about $97 per year per person, or about $277 for a family of four.
These amounts add to the list of taxes and fees that already impact rising healthcare costs.
Adopting a new procedure to require checks and balances on any future increases is one step the state can take to send a message to small employers that the state has their back on health insurance costs.

Determine Cost of Mandates

HB 7042 establishes a new procedure to give lawmakers a report on new health benefit mandates before they are asked to vote on these bills. That would include analyzing the potential costs and benefits of the new mandate.
Currently, when lawmakers vote on new health benefit mandates, they do so without such an analysis.
Instead, they often hear emotional stories from individuals facing challenging health circumstances.

Dri-Air's Charlie Sears

Each new mandate creates an increase in expenses, making us less competitive and restricting our growth.

Missing from the conversation, however, are details of the costs associated with the mandate and the specific reasons for their experience.
This new procedure would give a balanced analysis of the cost and benefit in the long term.
“A process that provides lawmakers with the specific data to help make that determination before a vote is a step in the right direction to get a handle on healthcare costs.” Herz said.
“Healthcare is a complicated landscape and covering more services and procedures means higher premiums for everyone. In some cases, that may make sense in the long term, but in other cases, it may not.”
Dri-Air's Sears urged lawmakers to vote for both bills, saying “I have no other means to control our health insurance costs other than to ask for your support to help address the rising cost of healthcare for employers, employees, and businesses like mine."

For more information, contact CBIA’s Jennifer Herz (860.970.4404) | @CBIAjherz


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