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Valley employers concerned about how a government-run plan could affect them
With several health care reform bills making their way through congressional committees, many Valley employers are worried how the outcome will affect their financial future.
Already facing increased health insurance premiums, businesses also are concerned about being required to provide health coverage for all workers and how a government-run option might affect their costs. One proposal that has benefits consultants wringing their hands is an excise tax on insurance plans that cost a family more than $21,000 a year.
Kathryn Bakich, national director of health care compliance at the Segal Co. in Washington, said lawmakers must be careful not to do something that will create bad consequences for employer plans.
Most plans cost $15,000 to $18,000 a year, she said, including both the employer and employee portions. With a couple of years of inflation, some of those plans will hit the $21,000 cap and be open to additional taxes on employers.
“Many times they call it a Cadillac tax, but these are not Cadillac plans they are taxing,” Bakich said. “That’s a big problem.”
She said she hasn’t seen any consensus from employers about which plans seem to be most employer-friendly. She said some employer groups don’t like any of the proposals, while others might like a single aspect of a complex plan.
“Everyone is looking to see what the Senate Finance Committee comes up with, which will combine with the Senate Health Committee bill,” she said.
Employer-based coverage
Dennis Hoffman, professor of economics at the W.P. Carey School of Business at Arizona State University, said the U.S. is one of the only countries that relies on employers to provide the bulk of health insurance. That practice originated after World War II, when the government imposed wage and price controls on companies. As a result, employers — beginning with the auto industry — offered health benefits to entice high-quality employees.
“In terms of basic economics, the labor market would be much more efficient if people were free to seek jobs and they could separate insurance coverage from employment,” Hoffman said. “Businesses could feel free to hire and fire people without concerns about insurance implications, pre-existing conditions and lawsuits around health insurance.”
Hoffman, who receives comprehensive benefits from the state, said he is satisfied with his coverage. The state of Arizona recently awarded $750 million in contracts to several health plans, all of which compete to sign up an estimated 135,000 members. Hoffman chose the Boise, Idaho-based AmeriBen plan, which is using the Blue Cross Blue Shield of Arizona provider network.
“I don’t have any complaints about my particular benefits package per se, but it still does cost the state and myself a lot of money,” he said.
Hoffman would rather have the state exclude health benefits and put that money in his paycheck so he can buy his own health coverage.
Jack Lunsford, president and CEO of Westmarc, a West Valley economic development coalition, said a government plan could destroy the employer-based coverage system that works for many Americans. Yet he also said a tax on small businesses for not offering insurance to employees would hurt them.
Lunsford is grateful for Westmarc’s coverage through Health Care Group, which provides a safety net for small businesses that have trouble finding affordable health plans in the commercial sector.
“We were not able to offer health insurance to our staff until we qualified under Health Care Group,” Lunsford said.
Businesses fear mandates
Employers such as Marwan Madanat, who hire independent contractors and don’t provide health insurance, say an employer mandate would be “devastating” to his company, Alphamed Solutions Inc. in Chandler.
Alphamed has four workers in Arizona and 16 across the U.S. who provide medical transcription and billing services for doctors’ offices. All are home-based independent contractors, which means they are responsible for their own insurance.
Madanat hopes to expand his business into the growing electronic medical records segment, which many say ultimately will help lower medical costs.
“In my opinion, we have got the best medical treatment in the whole world,” said Madanat, who was born in Jordan and became a U.S. citizen in 1994. “This is where I’m coming in with the technology. At the end of the day, we can help reduce the cost of providing services and hope the doctor will reduce their fees. This would have a ripple effect.”
Scott Harkey, a partner in Phoenix-based marketing firm Owens Harkey & Associates, said he recently had to cut health insurance benefits for five full-time and four part-time employees.
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