Businesses bracing for new health care expenses

Jay Pateakos

Gov. Deval Patrick’s 2008 Supplemental Budget Bill is set to impose new assessments and taxes on businesses in order to fund the state’s Health Care Reform Law that could place another $31 million dollar burden on Massachusetts businesses.

Raising approximately $7 million for the Health Care Reform Law over the last year, the governor’s bill hopes to increase revenue by another $31 million for the plan expected to have a projected growth of enrollment of 50,000, at a time when state business leaders say companies are having a hard enough time making ends meet.

Under the new Health Care Reform Law, businesses with more than 10 employees who do not provide health insurance to workers have to pay $250 per associate per year to the state for health care. Under the new bill will, the tax will also be imposed on employers that are carrying health insurance if 25 percent or more of the employees choose not to join. Although the increased assessment amount that business would have to pay is still unknown, Bill Vernon, state director for the National Federation of Independent Businesses, said the funds would likely come from roughly 2,000 businesses across the state.

“You do the math,” Vernon said.

Jon Hurst, president of the Retail Association of Massachusetts, said the new bill, if passed, would be counterproductive.

“It’s called a double hit for many businesses, and in many cases could force companies to just drop their health insurance plans and just pay the tax because it’s cheaper,” said Hurst, “It does nothing to address the real problem in attempting to lower health insurance premiums.”

According to the state’s Division of Health Care Finance and Policy, four out of five insured state residents receive coverage from an employer.

Vernon said asking employers — who have seen an estimated increase of $500 million in health care spending over the last year — to pay more for health care is hard for any business to swallow.

“Putting new bureaucratic and financial burdens on these businesses is the wrong way to go in a state with the highest energy costs and unemployment insurance in the country,” said Vernon. “A lot of these employers are just going to say, ‘enough is enough.’”

The bill set to be discussed on the senate floor on Thursday. A two-page letter dated July 23 was drafted by 23 business and civic leaders across the state asking House Speaker Salvatore DiMasi and Senate President Therese Murray to take no action on the provisions that “would add to the cost of health care, do nothing to address the factors fueling health care cost increases.”

Marylou Buyse, president of the Massachusetts Association of Health Plans, said that while the revenues for the six local commercial health plans rose by 7 percent between 2006 and 2007, medical expenses went up 8.3 percent, administrative costs rose 4.39 percent and surpluses decreased nearly 40 percent.

“The economy is really bleak now, with consumers and employers struggling with rising health care costs,” said Buyse. “Taxing health care to pay for health care is the wrong approach at the wrong time for the wrong reasons.”

Fall River Chamber of Commerce and Industry president Peter F. Kortright said the consensus in the business world is that with only a year and a half completed under the Health Care Reform law, there doesn’t seem to be a compelling reason to ratchet up the assessments to take care of the difference between what the state has raised so far and what it feels it needs to fund the program.

“It’s a slippery slope,” said Kortright.

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