March 18, 2009 – Illinois lawmakers are considering a state employer health care mandate that would also bring affordable insurance options to small businesses and their employees, a sector that disproportionately affected by rate increases.
But while the bill could extend coverage for a majority of Illinois’ 1.4 million uninsured, many small business owners say they oppose mandates, which could help drive struggling companies into bankruptcy, forcing cuts on employee wages and hours at the benefit of private insurers.
Under Senate Bill 1331 and an identical bill in the House, House Bill 1081, all Illinois employers with 50 employees or less not offering health benefits would be charged a payroll tax of 1.5 percent for each full-time worker. The Senate bill passed an Executive Committee hearing March 11 and is scheduled for a 2nd floor reading today.
The bills, introduced last month by Sen. David Koehler (D-Pekin) and Rep. Kathy Ryg (D-Vernon Hills), would also force insurance companies operating in Illinois to offer a low-cost – or, “community rating” – option for small business owners, workers not covered by their employers and the unemployed.
“Access to health care is even a bigger issue than it was a few years ago, because the loss of jobs has meant a loss of health care,” said Ryg. “We’re missing a safety net.”
In Illinois, only about 40 percent of small businesses currently offer health care, said James Meerdink, organizer for the Main Street Alliance in Illinois, a small business trade group that focuses on health care issues and operates in 11 states.
“When the rates go up 10 percent, 20 percent, 30 percent a year, at some point it reaches a breaking point where [small businesses] can’t afford it anymore,” said Meerdink. “It shouldn’t be the responsibility of small business to prop up a system that’s designed for them to be paying too much.”
Under a community rating plan, premium prices are determined by age, location and lifestyle choices – but are not affected by preexisting conditions, which disproportionately raise health care costs for small groups.
The bill could mean relief for small business owners collapsing under the cost of providing health insurance.
David Borris, owner of Hel’s Kitchen Catering in Highland Park, spends about $8,000 a month – almost $100,000 a year – on health benefits for 13 of his 25 part-time workers. That cost has doubled since 2002, he said. Last year, amid huge rate increases, Hel’s Kitchen employees were asked for the first time ever to begin contributing 10 percent of the cost of their premiums.
But Borris said he worries about a health mandate that requires consumers to purchase insurance on the private market.
“I’m deeply skeptical of taxpayer money subsidizing private health insurers and using me as a conduit,” he said. “If the mandate were pure, single-payer, government-funded health care, I’d be in favor of it. But if we’re mandated to purchase a product from a private health care company, I would be skeptical.”
Steve Vidmar, owner of Friendly Farms in DeKalb, agrees. Vidmar said mandates exploit small businesses that can’t afford health care, even at deeply discounted rates.
“I’m not in favor of any new tax on business at all,” he said. “You can’t put [health care] on the backs of businesses.”
Illinois is not the only state pursuing health care reform. Almost all states have proposed bills that would lower the cost of health care for consumers, but only two – Massachusetts and Vermont – have been successful.
In 2006, Massachusetts passed a health care package similar to the one introduced in Illinois, but which also requires individuals to carry health insurance. Since it was passed, more than 400,000 previously uninsured people have bought coverage and about 97.5 percent of the state is currently insured, said Christine Barber, senior policy analyst for Community Catalyst, a Boston-based health advocacy center.
Koehler said the bill would slow a snowballing health care crisis. Currently Illinoisans spend about $80 billion to $90 billion a year on health care, he said, and the costs are only going to grow.
“It’s not a question of whether the state of Illinois can afford to do this,” he said. “It’s a question of whether we can afford not to do this.”