Health Care Issues - Small Business
New York State has made great strides in reforming our health insurance system. However, more can and must be done. The Healthy New York program must be expanded, some form of cost/benefit analysis must be considered before health care mandates are imposed, and we must ensure access to health insurance for small businesses. In short, it is imperative that the ever-increasing burden of health insurance costs to small businesses be brought under control.
Expand the Healthy New York Plan to more Small Businesses
Issue Overview:
When Governor George Pataki signed the Health Care Reform Act of 2000 (HCRA) into law, small businesses won a decades-long effort to gain access to a quality, basic, low-cost health plan. The Health Care Reform Act of 2000 established a new program entitled Healthy New York, designed to help provide health insurance coverage for small-business employees and individuals.
The Program is open to small businesses with 50 or fewer employees that have not provided group health insurance during the 12-month period preceding application. In addition, at least 30 percent of the employer's work force must have annual wages at or below $30,000 and at least 50 percent of eligible employees, including one employee earning $30,000 or less, must participate. Employers must contribute at least half the premium cost, while the premium contribution of each employee must be the same. Sole proprietors and individuals whose employers have not offered health insurance for the past 12 months and whose household income meets certain requirements are also eligible.
As of January 1, 2001, HMO's have made this product available to eligible small businesses.
Analysis:
The Employee Benefit Research Institute (EBRI) reports that the cost of health insurance is the primary reason respondents were uninsured. EBRI found that 77% of the uninsured they surveyed reported the reason they do not have health insurance is because their employer's plan cost too much, not that a plan isn't available.
Recommendation:
Expand the Healthy New York Program in some form to qualifying small businesses with 50 or fewer employees, who have been offering insurance in the prior 12-month period.
Assemblyman Joseph Morelle has recently introduced legislation A.2132 which would
amend the Health Care Reform Act (HCRA) of 2000 to include more small businesses within the definition of a qualifying small employer by removing the requirement that a small business must not have offered health insurance for a 12 month period prior to application to the group health insurance program.
Health Insurance Access and Affordability
Issue Overview: There is a rapidly escalating crisis in health-insurance coverage in New York State. Small businesses--and especially sole proprietors--are losing access to health insurance, for two reasons:
Cost: In recent months small businesspeople in New York have faced sudden premium increases of as much as 30 percent (and even more). This is threatening the solvency of their businesses, and will drive many into the ranks of the uninsured.
Availability: More and more health insurance providers are eliminating sole proprietors' longstanding access to group-rated insurance coverage--or have abandoned, or threatened to abandon, service to these sole proprietors altogether.
Recommendation: With support from the state Insurance Department, the small business community is currently encouraging a voluntary response from the health insurance providers--urging them to work with us to place new products in the marketplace and to continue sole proprietor access to group-rated coverage. Unless this voluntary approach produces a quick solution, however, we believe the Legislature and the Governor should enact legislation requiring all health insurance providers to offer sole proprietors access to group-rated health insurance through general-purpose chambers of commerce and other business alliances approved by the Insurance Department.
We believe such a response is essential if we are to eliminate discriminatory practices, avoid a further swelling of the ranks of the uninsured, and support small business health and economic growth throughout New York State.
Senator James Seward and Assemblyman Joseph Morelle will be introducing legislation to address the health insurance crisis faced by sole-proprietors in New York State. The bill will have three major components:
1. Defining "general purpose chamber of commerce" in the law for the purposes of selling health insurance. This section of the bill will address the issue of "shell" chambers forming for no other purpose than to sell health insurance;
2. Regular certification of sole-proprietors by the chambers of commerce that they are, in fact, an actual business; and
3. Amending the Insurance Law to include sole-proprietors in the definition of "small groups" which currently only covers groups of 2-50 employees.
The goal of the legislation is to allow chambers of commerce and other business associations to continue to sell affordable health insurance to the sole-proprietor members.
Health Insurance Tax Credit
Issue Overview:
Increasingly, it is becoming prohibitively expensive for small businesses to offer their employees health care coverage. This high cost is cited by small business owners as the reason why they cannot afford to provide coverage or must shift an ever-larger portion of the costs to employees.
Recommendation:
New York State should allow small businesses a tax credit equal to a portion of the health insurance premium paid by employers. Such a credit would reduce the burden on small businesses which already provide coverage as well as allow other small businesses to begin participating.
Senator James Seward has introduced legislation (S.1532) which would provide a credit for small businesses equal to twenty percent of the health insurance premium paid by an employer.
Assemblyman Robin Schimminger has also introduced legislation (A. 918) which would provide for a credit for small businesses equal to ten dollars per covered employee per month.
Conduct Cost/Benefit Analysis of all Health Mandates before they apply to Small Businesses
Issue Overview:
Mandating that health plans offer coverage for a wide variety of treatments - ranging from infertility treatments, to increased access to clinical trials of new treatments and mental health coverage, to requirements that allow patients to see philosopher practitioners, may sound like good ideas, but the sweet coating of these good intentions covers up a pill that is hard to swallow... prohibitive costs. Cumulatively, these type mandates add thousands of dollars to the cost of every state-regulated health care policy in the state.
The question then becomes, "When does health care cost too much?" When do we say "no" to a mandate that sounds good, but results in fewer people receiving coverage?
Every time the legislature mandates a specific benefit, other important benefit choices are taken away from employers and employees. For example, money spent providing an infertility mandate could have been better spent on vision or dental care for employees. Government mandates take away these type of employee choices.
These added benefits are well intentioned but they make health insurance less affordable, particularly for small business because large employers have the financial wherewithal to self-insure under federal law and are, thereby not required to add state mandates to their benefit packages. The truth is, mandating health care services is equivalent to directly increasing taxes on small business.
Recommendation:
Support legislation requiring the state to test the costs and benefits of health insurance mandates on the State employee's health plans before imposing them on private sector plans.
Senator James Seward and Assemblyman Alexander Grannis are continuing to work to enact mandate review reform.