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Government affairs roundup

Mandated health care


 Legislative Scorecard
Employer mandates:
• Total no. of states where bills have been introduced in 2007 to require employers to either provide health benefits or pay a tax: 22 states
• States with bills still pending*: 18
• States with bills that have died or    been defeated in legislature: 4
• States with bills enacted: 0

Reporting requirements:
• Total no. of states where bills have been introduced in 2007 to require reporting of employers who do not provide health benefits: 17 states
• Enacted in: 1
• Defeated in: 4

By far, health care reform has become one of the leading political issues around the nation this year. In all, 22 states have introduced some type of employer mandate for health care or a payroll tax. While the employee threshold and the size of the payroll tax varies from proposal to proposal, these mandates will very clearly place a disproportionate burden on small, labor-intensive businesses in low-margin, entry-level wage industries such as restaurants, as compared to high margin, very profitable businesses. The more employees a business has relative to income, the greater the economic burden becomes when measured as a percentage of payroll. The greatest sacrifice will come from those businesses least able to pay.

Some of these proposals have worrisome hazy explanations of what constitutes a “large business” or a “corporation.” Franchisees could wind up being treated like part of the parent company—with a corresponding increase in health-care costs based on the employment figures of the known national brand, not the individually owned unit. Franchisees may have no choice but to cut labor costs by reducing employee hours, overtime, or eliminating other benefits. Worst of all, they may have to eliminate jobs.

Another related trend is the introduction of health care reporting legislation.

These initiatives, largely seen as a precursor to health care mandates, require a state entity to collect and report the names of employers with a certain number of employees covered by government health care plans. In many cases, the reports would be given to the legislature and posted for public knowledge as a means to “shame” employers. But the reports fail to address the costs associated with offering health care coverage to employees, as well as the attractiveness of state-subsidized plans. These reports also often incorrectly aggregate employees of a franchised brand under a single company, when in fact they are separately owned units. In many cases, employees choose not to enroll in employer-sponsored health care plans because they don’t think they need coverage or their out-of-pocket costs would be higher than low-cost or free health care from the state.

In 2006, 22 states introduced health care reporting legislation. Maine, Rhode Island and Washington passed reporting laws; similar laws had been passed prior to 2006 in Massachusetts, Illinois and Hawaii.

In 2007, 17 states are considering health care reporting laws. Thus far New Mexico passed a memorial, not a bill. It requires Medicaid recipients to report on their enrollment form who their employer is. If an employer has more than 50 employees they will be reported to a legislative interim committee.

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