Businesses brace for healthcare “rate shock”

Little enthusiasm for legislators’ plans

by Rob Roper

MONTPELIER – Jim Harrison, representing the Vermont Grocers Association (700 stores & 250 suppliers), summed up his organization’s main problem with H.559 – An act relating to healthcare implementation, “According to the Integration Report on the exchange, small employers in association pools could see their premiums go up an additional 18%, which would be on top of increases for richer plan designs, and annual increases in medical costs. Those employers that are in association plans, from what I can figure, would easily have “rate shock” of 40-plus percent…. It’s scary.”

A little over a dozen business people and business association leaders gathered at the State House on Wednesday at the invitation of the House and Senate Healthcare Committees to give input on how H.559, if passed, would affect them. The main points at issue were setting up defining the healthcare “exchange” as required by federal law, the potential, the potential outlawing, in effect, Healthcare Savings Accounts (HSAs) and Healthcare Reimbursement Accounts (HRAs), referred to in this debate as “Bronze Level” programs, and what sized businesses should be forced to purchase insurance through the exchange, those with up to 50 employees or those with up to 100.

Rep. Mike Fisher & Sen. Claire Ayer, Healthcare Committee chairs

Harrison’s prediction of “rate shock” for small businesses was echoed by George Mallek of the Central Vermont Chamber of Commerce (500 members), “Jim Harrison’s estimate of 40% is probably right on target, if anything it’s likely to be low.” Craig Fuller of Employers Health Alliance outlined a scenario in which businesses could be facing 80% to 100% increases in their premium costs under H.559.”

Sara Byers, vice president of Leonardo’s Pizza and a member of the board of directors of the Lake Champlain Chamber of Commerce (more than 2500 members), testified, “Many of our members [who employ 51-100 people] have invested in cost control initiatives, and if they were included in this exchange then they would likely abandon those, and that would be unfortunate. I understand from the administration’s study that including the 51 -100 group would actually increase their cost by 18%, and I’m sure it is not our intent to ask these businesses to cross-subsidize smaller businesses.”

Notwithstanding Byers generous benefits of the doubt, cost shift and subsidization are at the root of what this legislature is trying to do with healthcare.

Tom McKeown, executive director of Business Resource Services did a poll of his member businesses and received 172 responses. “Specifically,” McKeown reported, “47% of respondents were not aware that significant changes were taking place in January 1st, 2014. 88% do not believe businesses less than one hundred should be required to purchase health insurance only through the exchange. 91% believe that Bronze Plans (HSA’s an HRA’s…) should be offered inside the exchange. Currently, the way it’s written, Bronze plans will not be allowed…. 95% would prefer that the state allow them to keep the plan they’re currently offering if the plan in the exchange doesn’t suit their needs. 87% responded that if the only available options in the exchange were more expensive, it would hurt their business.”

McKeown also received responses about how businesses would react if H.559 became law. “We asked what they would do about the additional costs. 32% aren’t sure. 30% said they would pass 100% on to the employees. 22% were more gracious and said they would do some sort of cost sharing…. 9% were very gracious and said they would absorb it. But, that’s countered by the fact that 8% said would drop insurance coverage all together. 90% of those surveyed think that you should not move forward with this version of the exchange.”

Overwhelmingly, businesses testified that they want flexibility, choices and control over their health insurance decisions, and the reality is that legislature wants to take much of that away.

Roland Bellavance of Bellavance Trucking testified, “This is where it gets a little hairy for me. When I think about our unemployment insurance that’s dictated by the state, we have no control over that. If I think about liability insurance, collision insurance, these are both huge numbers in our business. And, if we start talking about healthcare being controlled by the state now, all of a sudden that’s going to be shoved down our throat without any option as to what we will have to pay.

“Right now as employers we have an option,” explained Bellavance. “We can change plans, we can change deductibles, we can change co-pays. And, if you make our small business people forced into a one-plan-fits-all, it never will. We need to have the right, or the ability, to make choices from a business owner’s side regardless if it’s one employee or a hundred employees, we have to be able to control that stuff.”

Currently, tens of thousands of Vermonters are covered by high deductible plans purchased through insurance, and the trend has been for companies to move into these types of plans and abandon low deductible plans. Byers warned, “I know that many of our members that are under the Vermont Association healthcare insurance such as Leonardo’s – the majority are under Bronze level plans, and that’s all that we can afford. And, offering that type of coverage could mean the difference between offering coverage and not offering coverage.”

Nigel Mucklow, owner of New England Floor Covering in Burlington, expressed a common fear, “The product we’ve had, we like the flexibility over the years that we can change. And we don’t want you guys to box us into a certain category or a certain way to do business…. I’m scared that you’re going to make us have a product that’s going to cost a lot with little deductibles.”

A handful of members of the left-wing organization, Vermont Businesses for Responsibility showed up voice support for the bill and it’s intentions: Bram Kleppner, CEO of Danforth Pewter (38 employees) Michael Roche of Stowe Tree Experts (5 employees), and Russ Bennett of NorthLand Design & Construction Inc.

Bennett had an interesting comment, saying, “If the private sector could solve this problem… it would be solved. They can’t. That’s why we’re in the position we’re in.” This does not consider that government has tried innumerable schemes to control healthcare costs and cover more people (Medicaid, Catamount Health, Dr. Dinosaur, guaranteed issue, community rating), and has a record of utter failure. The private sector, unencumbered by overly manipulative government regulation, really has not been given a shot.

Roche seemed more concerned with the issue of fairness, “I feel like I want everybody in, because I want everybody to feel the pain. And, there will be pain.”

Two other controversial aspects of H.559 also drew fire: the possibility that politically favored groups such as Teachers’ Unions would be “grandfathered” out of having to participate in the exchange, and, although the bill would repeal Catamount Health, the assessment (read “tax”) on businesses to ostensibly pay for Catamount Health would remain in place.

Both sides, those in favor of moving toward a universal healthcare system and those who were skeptical, were solidly against the idea of anybody being cherry picked by politicians for special favors. Supporters of single payer simply want everybody in. Opponents cried foul. As Jim Harrison of the Grocer’s Association put it, “It has been recommended that certain groups such as teacher be allowed to be grandfathered and not participate in the exchange. Maybe I have that wrong. Well, our members might like to be grandfathered, too.”

Overall, John Dubie, owner of Pearl St. Beverage, captured the sentiment of the evening’s testimony to the committee members. “I know that your ultimate goal is to make Vermont the leader in the nation and a better place to live and to work, but I can honestly tell you that I am extremely afraid for my business and my livelihood and what might come from this single market. If you get it wrong, you put Vermont in a devastating situation, and Vermont citizens would be left with little or no healthcare options.”

Or, as Nigel Mucklow put it, “Keep it flexible. It has been working. Don’t screw it up.”

One thought on “Businesses brace for healthcare “rate shock”

  1. I was encouraged by the turn out and quality of the feedback provided by VT businesses. I fully expected them to be passive and unprepared – bravo! Perhaps the comment was made, but missing from this report was the implications for those businesses that compete outside of VT – this kind of increase would put them at a distinct disadvantage. Is the Shumlin administration so hell bent on single payer that they would willfully damage VT businesses? Seems they are …

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