A number of business interests representing companies small and large expressed significant concern about a proposed $50 million assessment on insurance carriers, that they say will increase the cost of providing employees with health insurance.
The assessment is part of a legislative proposal that would create a “public option” for employers to buy health insurance for their employees through the Office of the State Comptroller.
According to an analysis from Oliver Wyman Actuarial Consulting, Inc. that was commissioned by UnitedHealth Group, a $50 million assessment would result in an increase of $29.73 yearly in premium rates per person.
In a letter to Gov. Ned Lamont dated April 21, twenty four organizations, including the Connecticut Business and Industries Association, the Connecticut Retail Merchants Association, the Connecticut Farm Bureau Association, the Connecticut Food Association and several chambers of commerce warned that the bill would put more pressure on businesses that are already struggling to recover from the economic fallout of the pandemic.
Business leaders raised fears that the $50 million assessment on insurance carriers would mean that they would have to pay higher premiums.
“There’s no such thing as a tax on business. It’s always passed on to the consumer,” said John Calkins, Legislative Chairman of Connecticut Benefit Brokers, another organization that signed the letter.
On April 13, five large insurance carriers — CVS, Anthem, Cigna, UnitedHealthcare and Harvard Pilgrim — sent a letter to Lamont in which they said the tax would “inevitably be passed along to policyholders in the form of higher premiums.”
“Rates are a reflection of costs. Any new tax injects added cost into the system,”said Susan Halpin, executive director of the Connecticut Association of Health Plans, which represents the insurance carriers.
Small business concerns
Mary Planeta Fitzgerald, president of Acme Wire Products in Mystic, said that she pays $250,000 in health insurance for her 44 employees each year — her biggest expense outside of wages.
“I spend at least a month every year going over healthcare insurance plans trying to pick one that is affordable for both the company and the employees,” she said.
While the bill exempts businesses that employ 50 or fewer people, Fitzgerald said that this could also make it difficult for her to expand her business, or that it might incentivize business owners to outsource or use automation rather than hiring more workers.
“There are more and more taxes and mandates being put on businesses. It is limiting our ability to compete regionally,” she said.
Joan Nichols, executive director of the Connecticut Farm Bureau Association, said that local farmers were also concerned about the potential rise in healthcare costs.
“The profit margins on farming are slim,” she said, adding that many farmers, particularly those in the shellfish and the dairy industries, had suffered from volatile markets during the pandemic.
Nichols said that farms, the majority of which in Connecticut are family-owned, also employ seasonal workers, which could affect whether or not they are considered small businesses.
“It remains to be seen what the long term health effects are — both mental and physical,” she said. “Is now really the time you want to mess around with premium costs?”
A greater cost
Dr. Robert Russo, executive director of the Connecticut State Medical Society, said that the assessment could also cause difficulties for private practices that needed to provide their own employees with health insurance.
He said he doesn’t understand why the assessment can’t be covered by either the government or the health insurance companies, rather than having it placed on the small businesses.
But Russo said that he still supported the public option. He said that there were too many uninsured people who came into emergency rooms without insurance, racking up exorbitant bills.
“There’s nothing that would solve the problem as quickly as a good public health option that is both attractive to patients and the physicians,” said Russo.
Russo said that when people don’t have insurance, they often wait until an illness has become serious before they look for help.
“The later in the disease process we intervene with medicine, the more costly — not only in money but in human suffering and death,” he said.
Lynne Ide, director of program and policy at the Universal Health Care Foundation of Connecticut, an advocacy group that focuses on health insurance and healthcare, agreed that having more uninsured individuals has far-reaching costs on public health.
“The question is, do you want to be helping people up front or do you want to pay more for people at the other end?” she said.
Assessing the assessment
On Thursday, the Finance, Revenue and Bonding Committee voted 30-17 to move the bill forward to be considered by the General Assembly.
State Reps. Kerry Wood, D-Rocky Hill, and Tammy Nuccio, R-Tolland, questioned the need for the assessment, which under the legislation would provide subsidies for individuals who are struggling to afford health insurance.
Wood said that the approximately $85 million in federal funding that was allocated to the state through the American Rescue Plan Act would accomplish essentially the same thing.
Nuccio said that she didn’t understand why the assessment was necessary in light of the recent changes to the Affordable Care Act, which expands premium tax credits to people whose income is over 400 percent of the Federal Poverty Level and caps the cost of premiums at 8.5 percent of an individual’s income.
But State Rep. Sean Scanlon, D-Guilford, said that the federal legislation didn’t address everything, like allowing cost-sharing and fixing the “family glitch” which prevents low and middle-income families from enrolling in an affordable plan.
Scanlon also said that the federal funds were limited to two years.
“I don’t think there’s any reason we shouldn’t complement that at the state level,” said Scanlon. “I do think there is still a really valid reason we should be doing this.”