Small Businesses Hit Hard by Cost of Health Mandates
The legislature's Office of Fiscal Analysis (OFA) has released the cost estimates for many of this year's proposed health benefit mandates. What OFA says shouldn't shock anyone: Mandates cost money.
Health benefit mandates are state laws that require fully-insured health plans to cover various healthcare services. If you are someone who needs the covered service, you will appreciate the mandate.
But there is a flip side. Each mandate comes with a cost. And that cost transforms into higher insurance premiums that lopsidedly hit Connecticut’s small businesses because they generally have no choice but to buy fully-insured plans.
Bottom line: More mandates from the legislature mean higher healthcare costs for small businesses.
Noting the impact
Because state employee healthcare plans voluntarily comply with mandates, each proposed mandate is reviewed for how it would impact state finances. These fiscal notes, researched and written by OFA, only estimate the cost to the state and not to private-sector businesses or individuals.
It’s easy to see that the cost of mandates to companies and individuals will be much higher because the number of those in private-market insurance plans far exceeds those in state employee plans.
For example, one proposal would require these plans to cover non-preferred prescription drugs (SB 1084), and the cost to the State for this mandate would be $2.38 million for Fiscal Year 2012 and $4.76 in Fiscal Year 2013.
There's another cost risk of mandates. Federal health reform requires that if a state adopts any mandated benefit that goes beyond the benefit levels of the “essential benefit plan” then that state has to pay for the cost of the mandate.
Because the federal government has not yet defined what constitutes an “essential benefit plan,” Connecticut is rolling the dice with each new or expanded mandate that it adopts. If a mandate pushes the state beyond the “essential benefit plan” then Connecticut will be left paying the bill.
Simply put, when the legislature votes to pass mandates like this, they are voting to increase the cost of health care – for both the State of Connecticut and its private sector employers alike
Once again, small businesses are hoping that legislators understand the significance of their decisions on the operating costs of Connecticut companies. Businesses simply cannot hire people, grow and pay taxes if the costs of doing business in Connecticut are too high. Lawmakers should avoid adding these mandates, in order to protect the state's struggling private companies and help and create jobs.
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