Since we’re in the habit of using latin phrases when discussing business opposition to the fair share assessment (proof: 12/27/05), and given all the dictionaries that were opened up last night (check this and this), let’s roll out another one: non sequitur.
First, the news: As was announced months ago, the Patrick administration filed the regulatory notice yesterday to adjust the definition of “fair and reasonable” in the fair share assessment regulations (notice and text of proposed changes). A hearing on the proposal will be held on September 5.
Chapter 58 provides for an assessment of up to $295 per worker per year on firms that do not provide “fair and reasonable” coverage to their employees. The definition of “fair and reasonable” was left up to the Division of Health Care Finance and Policy. The Romney administration came up with two tests. First, companies would be considered as offering fair and reasonable coverage if at least 25% of full time employees are enrolled in an employer-sponsored group health plan. Alternatively, companies were deemed to meet the requirement if the employer offers to contribute at least 33% to the premium cost for its group health plan for its full time employees that work at least 90 days. Either test was good enough. The key proposed change requires firms to meet both tests to be considered complying with the fair share definition – changing the “or” in the regulation to “and.”
These tests would still be far below the legislative intent of the drafters of chapter 58, and brings the revenue estimate in line with the expectations that were shared with the business community at the time. (see detailed background and sources here).
The adjustment broadens the assessment, and would increase the revenue raised to around $45 million. Under the Romney definition, the assessment is expected to bring in around $5 million this year. The increased employer contributions match $30 million in increased payments by low-income enrollees in Commonwealth Care, a $20 million assessment increase on hospitals, a cut in hospital Pool reimbursements, a $33 million assessment on excess insurer reserves, and the shift of up to $35 million in funds now dedicated to coverage for unemployed workers. The shared responsibility model spreads the burden across all sectors.
Predictably, the employer community is objecting to paying their share of the costs. The Retailers call it the end the employer support for the law, though we remember they didn’t support the original assessments, either. By the way, despite the opposition of their official organizational representatives, small employers overwhelmingly support the assessment.
Their argument is that changing the tests will lead employers to drop coverage for their workers, because it’s cheaper to pay the $295 than offer coverage.
This argument is a non sequitur. Of course, dropping coverage saves the employer money. This is true whether or not there is a fair share assessment. Under the current or new definition, it’s always cheaper to drop coverage. Employers offer coverage because they believe that benefits allow them to attract and keep good workers. Offering coverage keeps their workers healthier, and improves job satisfaction and employee retention. Changing the definition in a regulation doesn’t affect this calculus one bit.
Firms that offer substandard coverage, for example, making employees wait 6 months or a year before coverage starts, reap a substantial benefit from the state. Their low income employees are eligible for Commonwealth Care during the waiting period. In effect, the state is providing benefits for the company. This regulatory change would just recover a tiny portion of that state benefit enjoyed by the employer. By imposing a requirement that firms offer halfway decent coverage, the regulation will fairly spread the cost of providing coverage across a broad range of employers benefiting from the new coverage programs. It’s only fair and reasonable.
Brian Rosman
