Businesses rip healthcare proposal
Trade group declares higher costs will lead to dropped coverage
Businesses are balking at a proposed state regulation that, a leading retail group says, will force small companies to spend thousand of dollars more in health insurance for their workers, and could lead many employers to drop coverage altogether.
Proposed rules, issued yesterday by Governor Deval Patrick's administration, are intended to help close a gap in funding the landmark healthcare law.
The regulations, if adopted, would take effect Oct. 1, and raise about $45 million this fiscal year, according to documents made public yesterday. A public hearing is scheduled for Sept. 5.
Current law requires most employers with more than 10 full-time equivalent employees to offer health coverage or to pay an annual "fair share" penalty of $295 per worker. It gives companies an option of paying at least 33 percent of full-time workers' premiums within the first 90 days of employment or making sure that at least 25 percent of their full-time workers are covered by an employer plan.
But the new regulations would require employers to meet both requirements, or pay the penalty.
"I think there is going to be a revolt over this," said Jon Hurst, president of the Retailers Association of Massachusetts, a trade group with 3,000 members. "This is tough economic times, and I don't think they fully understand how many small businesses are going to be hit hard by this."
Hurst said hundreds of seasonal businesses, especially on Cape Cod, would be hurt, because the proposed changes would also require reporting workers' health coverage on a quarterly basis, instead of annually, prompting more paperwork. He predicted many small retailers would find it cheaper to just drop health coverage and pay the annual fine instead.
The new proposal comes just two weeks after lawmakers approved a supplemental funding request by the governor to raise about $100 million for the healthcare law. That package added an assessment on health insurance companies' reserve accounts, required additional payments from hospitals, and shifted money from the Medical Security Trust Fund, which is used to pay health insurance for the unemployed.
Rick Lord, president and chief executive of Associated Industries of Massachusetts, said employers are already paying more than their fair share to fund the state's near-universal health system - an additional $500 million a year to cover 85,000 more workers since the new healthcare law went into effect. He said members of his organization, the state's largest business trade group, would lobby the Patrick administration against the proposed changes.
But Health Care for All, one of the state's largest consumer groups, applauded the proposals. Brian Rosman, the group's research director, said consumers were required this year to pay higher premiums and deductibles to help cover the funding shortfall.
"We think this implements the shared responsibility concept that was the hallmark of healthcare reform," he said. "It makes sense to us to say to companies that offer minimal or no benefits, 'You have to make a small contribution.' "
When the healthcare law was signed two years ago, the Legislature estimated the "fair share" penalty on businesses would bring in $45 million in the first year and $36 million in the fiscal year that just ended. But the state collected no payments the first year, and state officials said employers made penalty payments of only about $7 million in the past year.
Kay Lazar can be reached at klazar@globe.com.
