Several business groups join forces for the fight
Several major companies and business groups have come together to fight against bills that would require Rhode Island’s largest employers to spend at least 8 percent of their payroll on health insurance for their workers each year, or else pay a penalty of at least $250,000.
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The legislation, dubbed “Fair Share Health Care,” was conceived by union leaders and has been introduced in about 30 states, said R. Kelly Sheridan, who is fighting against it in his capacity as Rhode Island lobbyist for Wal-Mart.
“It’s not likely to pass in most states,” Sheridan said. Only Maryland has so far adopted such a measure, while 10 states have rejected it, according to local business opponents. But “Rhode Island is one of the states where it’s considered to still be in play,” Sheridan said.
“That’s going to send a heck of a message across the country,” said Terrance S. Martiesian, Rhode Island director of the National Federation of Independent Business, echoing “Fair Share” critics nationwide who’ve predicted that companies will avoid states with such laws.
Yet the measure, which got its first hearing on April 12 before the Senate Health & Human Services Committee, also has business backers – from Joe Cannon, president of CAS America, a casework manufacturer, to Joshua Miller, owner of the Trinity Brewhouse.
In an “open letter” to Gov. Donald L. Carcieri and the General Assembly published in local newspapers, they and 18 other business owners said the bill would “level the playing field” for employers that “responsibly” invest in health insurance, and end an “unfair” situation:
“When a few large, profitable companies shift their health care costs onto taxpayers and the state,” they wrote, “it places a burden on all of us,” putting pressure on Medicaid, pushing health premiums up for those who remain in the risk pool and leaving many uninsured.
“That’s unfair to employees, the public and the business community in our state,” they concluded.
Just how big an impact would “Fair Share” make? No one knows for sure yet.
The latest figures available – compiled by the R.I. Economic Development Corporation and recently verified by Providence Business News – shows 31 private employers in Rhode Island in the affected category (those with more than 1,000 workers). Collectively, they employ more than 76,000 people, by PBN’s estimate – one in seven private-sector workers.
A study last year by Health Insurance Commissioner Christopher F. Koller estimated that 98 percent offer health benefits, compared with 78 percent of those with fewer than 50 workers.
How much do they spend on health insurance? Again, no one knows for sure. But the 2005 National Survey of Employer-Sponsored Health Plans, conducted by Mercer Health & Benefits and released in November, showed the average U.S. employer – of any size – spent $7,089 per worker on health benefits, while Rhode Island companies spent $8,834.
The average annual wage in Rhode Island as of last year was $36,881, according to R.I. Department of Labor and Training data; under the 8-percent standard, a company with a payroll that mirrored the state average would be required to spend at least $2,950 per worker.
A company paying minimum wage ($6.75 per hour) with all full-timers would have to spend $1,123 per person. To avoid penalizing high-wage employers, “Fair Share” proponents have suggested exempting pay that’s not taxed for Social Security – anything above $94,200 in 2006.
But the legislation also would revise the 8-percent standard after a year, to reflect actual costs in Rhode Island. Koller’s office would be required to compile annual reports on employment and benefits at the affected companies, and starting in 2008, any employer that spent less than the average of those reported would be subject to the penalties.
That’s a fatal flaw in the measure, critics say, because it would lead to a constant escalation of spending. “If the ultimate goal is to provide health care at a reasonable price, this isn’t going to do it. In fact, it’s going to do the opposite,” said Dale J. Venturini, president and CEO of the R.I. Hospitality and Tourism Association.
Broadly, business critics of the “Fair Share” bill also say they’re concerned that, as in Maryland, advocates would soon try to expand the mandate.
“Right now we’re talking 1,000 and up,” said Laurie White, president of the Greater Providence Chamber of Commerce, “but the worry is that next year, it could be up to 50 employees, and it could ratchet up to 25 percent.”
Asked for his take, Koller said he and Gov. Donald L. Carcieri “have no position on that bill.” He did note, however, that 8 percent is “relatively modest,” and he called it “interesting” that the bill used a spending standard rather than a definition of acceptable coverage.
Ann Rhodes, head of Rhode Island for Health Care, a union-backed group that’s leading the “Fair Share” effort, said a spending standard is the only way to get around federal Employee Retirement Income Security Act (ERISA) exemptions. Other “technical points” may still be tweaked, Rhodes said, but “we’re focusing on the big picture.”
