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

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.

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 yearequal to the salary and benefits of a full-time teller, she said.

"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."

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.

"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.

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 costs.

* Read more at cbia.com