I’ve held on to this all weekend, thinking we should ignore it, but since it’s so weird and getting some attention in other parts of blogland, I’ll share it with you all.
According to blogger Jeff Cutler, a small Cambridge hi-tech firm is dropping health coverage for its employees, get this, due to the failure of Massachusetts to pass Question 1. The firm is called Aspiant, and its CEO, Mirko Geffken, was reportedly the third largest contributor to the question’s sponsor, Committee for Small Government.
Here’s an excerpt from his email to employees, sent at 11:02 pm on election day:
…
with the recent events Aspiant is no longer able to provide a health insurance contribution. This means that effective with the next payroll the employer contribution to healthcare is reduced from 50% to 0%.
…
I regret having to move in this direction, but this is the partially the cost of doing business in the state of Massachusetts and the impact that future policies will have on this organization.
I can only hope that future elections will provide a more positive environment for business or further measures will have to be taken.
As always should you have any questions feel free to see me.
All the best
Mirko
There’s no law against this, although if the firm had more than 10 employees, it would be responsible for the Fair Share Assessment. The company would also have to set up a section 125 plan for the workers, so that pre-tax payroll deductions could be designated for health insurance.Also, any low-income workers will be ineligible for Commonwealth Care, which has a 6-month look-back lockout if an employer drops coverage.
These and other anti-crowd-out measures discourage employers from dropping coverage, and appear to be working. Employer coverage here has grown, not shrinked shrunk [thanks guys!] since the passage of the chapter 58. The percentage of firms with three or more workers offering coverage increased from 73 percent to 79 percent from 2006 to 2007. Workers report that the quality of their coverage has not declined.
There’s a lot of nasty outcry (like here and here), and the story is getting national attention. Already on one blog, a commenter said he used to send clients to Aspiant, but now will boycott the firm.
The real import is how rare this story is. As the recession deepens, I’m sure we’ll see more examples like this. But for now, this guy is making news because it’s so unusual.
Brian Rosman
I’ve since learned that Aspiant is paying employees “bonuses” that they can direct towards health insurance if they wish – so the employees get extra cash and the company doesn’t have to pay taxes. Win win right? Wrong! The one employee I know at Aspiant seems satisfied with this new arrangement, but may not be aware of the high cost of being self-insured. Not sure what Aspiant’s group rates were – but I bet they were less than Joe or Jane Citizen will need to pay on their own.
I’m concerned about the number of businesses who aren’t able to provide quality affordable health care coverage to their employees. The high cost of health care has a direct and negative impact on individuals, families and even businesses who aren’t able to provide it.
First, we must lower the cost of health care by investing in health information technology along with a focus on preventive care.
In addition we need to provide a small business health tax credit so that these businesses are able to provide affordable health care.
But most importantly we need to have a discussion on what we need to do to provide every American with the opportunity to obtain quality affordable health care either through their employer or for them to be able to purchase affordable health care.
MCC makes one good point. The correct word is shrunk. Other than that, however…
This story isn’t rare. I have many clients who have dropped their contribution rate or coverage completely. Business is tough out there. Those of you in the public sector or working for non-profits don’t understand what is truly going on. Go look at the auto dealer who is off 50%. You cannot sustain high expenses in this economic climate. I have one client who shifted an additional 40% of their premium to the employees in order to make it through the winter. The reason that percentage wasn’t higher is due to the Mass. law. Last year, they paid almost 70% of the premium. This year, the number is around 30%. Their choice was drop the contribution rate, fire workers, or close their doors.
BTW, there is no such word as “shrinked.” The correct word is shrunk.