SEMA News - May 2009
SEMA LEGISLATIVE AND TECHNICAL AFFAIRS
Health Care Reform Takes Center Stage
SEMA Members Agree the Solution Must Be Affordable
By Stuart Gosswein
SEMA members expressed a strong desire to provide access to high-quality health care benefits to their workers, even though it was a financial strain on their small business to do so, especially under current economic conditions.
SEMA members responded to a comprehensive survey conducted in early 2009 with a clear message that the nation’s health care system is broken. The survey results underscored the need to make tough, balanced decisions to help solve the problem. Issues include whether to require businesses to offer coverage and individuals to buy insurance.
Under the current system, nearly 27 million small-business owners, employees and dependents are left uninsured. Skyrocketing premiums have made it especially difficult for specialty-automotive companies to offer health care coverage to their employees. Enacting legislation to help SEMA-member businesses gain access to affordable coverage remains a top priority for the association—especially during these times of economic uncertainty.
“The SEMA member survey provides valuable insight into the health care dilemma faced by small businesses,” said Steve McDonald, SEMA’s vice president of government affairs. “SEMA members want to ensure that their employees have access to quality coverage while cautioning that there is no one-size-fits-all answer. More than any other, one point revealed in the survey results is abundantly clear: In the midst of the current economic downturn, the solution must be affordable.”
Nearly all SEMA members are small businesses. As of early 2009, 25% of SEMA-member companies participating in the survey provided health insurance and paid the entire premium. Another 47% asked the worker to pay a portion of the premium, while 28% provided no health care coverage. Since SEMA last surveyed its members on this question in 2005, there’s been a continued trend toward requiring the worker to help pay the premium. Companies also took other steps to reduce premiums, such as seeking reduced coverage and increased deductibles.
Last year, insurance premiums rose at an annual rate of 10% and beyond for more than 50% of respondent companies. For those companies that provided coverage, 27% of respondents paid an average premium of $3,000–$5,000 per employee per year, while 36% paid more than $5,000 per year.
The survey indicated a willingness to work within the current employer-based system or transfer health insurance responsibilities to individuals. The key message was that any solution needed to be affordable and could not impose costly mandates on the employer.
The survey showed that federal health care tax credits to employers would be a powerful incentive for increasing health insurance coverage. Nearly 41% of the respondents agreed that a federal tax credit of $2,000 per employee would make it financially possible for their companies to voluntarily cover 60% of the premiums. Another 43% already provide at least 60% coverage. There was also widespread support for permitting small businesses to band together to pool risk, reduce insurance premiums and level the playing field between large and small companies in the health care market.
In contrast, SEMA members generally opposed a national pay-or-play policy with mandates on employers to provide certain defined health care benefits to their workers or pay into a government insurance plan that would. Sixty-six percent of the respondents were opposed to the government defining the kind of health care coverage an employer must provide or the percent of premiums that an employer must pay under a pay-or-play system. Under proposed legislation, small businesses could be exempt from such a system, but their workers could be required to purchase insurance on their own through an individual mandate.
SEMA members expressed a strong desire to provide access to high-quality health care benefits to their workers, even though it was a financial strain on their small business to do so, especially under current economic conditions. SEMA members criticized the government and insurance companies for not doing enough to control health care costs and expressed frustration, confusion and uncertainty over the exact reasons why premiums have been rising so quickly.
SEMA is a member of the Small Business Coalition for Affordable Healthcare, the nation’s leading coalition dedicated to increasing access and affordability of health insurance for the largest segment of the uninsured—small-business owners, employees and their dependents. Congress is expected to begin debating reform legislation in the near future. President Obama has indicated that he wants to expand the current employer-based system and implement other structural reforms to promote market-based competition, reduce costs and simplify paperwork.
“SEMA welcomes the current opportunity to provide a national solution for access to affordable care,” said McDonald. “We remain enthused about legislation that would establish state or nationwide health insurance purchasing pools offering small businesses a wide range of health plan choices.
SEMA will also work to promote other comprehensive reforms to provide quality, value and competition.”
A Roadmap to Enacting Reform
Legislation must be enacted into law in order to achieve any significant health care reform. Previous attempts have failed, so success this time is not guaranteed. Here are some contemplated steps on a path to reform.
Step one has been accomplished: gaining widespread agreement that the health care delivery system is broken. Unlike in years past, the major players are all willing to talk—politicians, health care providers, insurance companies, drug companies, big and small businesses, individuals, etc. Reasons vary: the current system is unsustainable, the number of uninsured is increasing, there are profits to be made by providing care to the uninsured, etc. Step two is reaching an agreement on a direction for reform. President Obama wants to expand the current employer-based system and implement other structural reforms to promote market-based competition, reduce costs and simplify paperwork. Under this approach, companies would be required to provide minimum health coverage to their workers or pay a percentage of payroll to fund a nationwide health insurance program for uninsured Americans. The payroll tax would probably not apply to “small businesses,” but that term has not been defined.
“The United States spends $2 trillion a year on health care, and that number is expected to double in the next 10 years. America’s fiscal situation will remain on shaky ground as long as we continue receiving such poor returns on this crucial investment. If our initial efforts to restore American prosperity are ever to bear true fruit, Congress must follow up by creating a high-quality, universally accessible and cost-effective health-care system.”
—Senator Max Baucus, Chairman of the Senate Finance Committee
If there is to be any consensus for large-scale reform, expanding the current employer-based system is the likely candidate. The other approaches would likely be very disruptive and controversial, whether creating a single-payer government system or switching to individual coverage. Nevertheless, any reform will pose difficult hurdles. For the employer-based system, sample deal breakers include: What is the payroll tax? Will small businesses with 25 employees have to pay a tax? Will all individuals be required to secure coverage? Will competition drive down insurance premiums?
Congress will attempt to craft legislation to address these and other questions. Lawmakers in the U.S. Senate and House will hold hearings and discussions this spring. The goal is to draft legislation in Congress during the summer and complete work this year. It is a very ambitious if not impossible schedule, since the issues—taxes, health and commerce—are under the jurisdiction of multiple committees. Additionally, there will likely be significant political differences on the role and scope of government intervention in the marketplace. Whether these differences can be bridged is unclear. Lawmakers view the current window of opportunity to achieve success as narrow, since the momentum created by the 2008 elections will slow and we will soon be caught up in the 2010 election cycle. The nation’s economic woes may further slow progress.
SEMA is actively engaged on Capitol Hill and working closely with the National Federation of Independent Business and, as a member of the Small Business Coalition for Affordable Healthcare, to represent and address small-business concerns during this critical debate.