AIM's legislative agenda targets mandated benefits

by Chris Long

for the Business Journal

One of the major focuses during the 2000 session of the Missouri legislature will be efforts to reduce or control health care costs for small employers.

Associated Industries of Missouri surveys indicate that most Missouri businesses are seeing health insurance premium increases of between 30 percent and 35 percent some as high as 50 percent.

This sticker shock is also an increasing phenomenon for employers consider-ing offering coverage for the first time especially those companies with a high-risk work force or high-risk individuals within their group.

A glance at the help wanted section of any local newspaper will give you a clue as to the importance of offering health insurance benefits in today's highly competitive labor market.

More and more, employers are coming to the realization that to attract top employees and to keep workers who contribute positively to the bottom line, a company must offer health insurance benefits.

Health insurance benefits are often the difference between an acceptable and unacceptable job in today's buyers' market.

Rising costs are serving as a barrier to employers who wish to offer a wide range of benefits or offer first-time coverage. Associated Industries surveys also suggest that businesses are realizing the major source of these cost increases state government-imposed mandated health benefits.

In the 1999 session of the Missouri legislature, more than 30 bills were introduced which sought to enact some form of health insurance mandate. Previous sessions have seen approximately the same number of these bills introduced.

Associated Industries successfully opposed many of these mandates. However, every year a few slip through the cracks and are adopted by the legislature.

State-mandated benefits eliminate the ability of an employer to manage a benefit package based on the types of coverage the business can afford and the types of coverage desired by workers.

A study by the nationally recognized benefits consulting firm of Milliman and Robertson concluded that businesses could see health care premiums rise by $20,000 a year due to a conglomeration of the 12 most commonly mandated benefits.

This same package of common government mandates is thought to increase the cost of insurance by as much as 30 percent, according to studies released by the National Federation of Independent Business.

Businesses especially small employers have a limited amount of resources to pay workers in wages, health care, pensions and other benefits.

If a business owner is forced to provide a list of benefits his or her employees may not want or utilize, this leaves less leeway to design an enhanced benefit and compensation package for workers.

Associated Industries believes important benefit choices should be made by employers and employees, not the state legislature.

Associated Industries believes employers should be allowed to tailor their benefits to the needs of their work force it creates better value for the health care dollar spent.

Federal law allows many large businesses to avoid costly state government-imposed mandated benefits by self-insuring their benefit programs. This Employee Retirement Income Security Act protection allows for greater plan management, taking into account both cost and quality of benefits.

Studies also show that self-funded Fortune 500 employers offer benefit packages that are more generous than fully insured plans when it comes to child care, outpatient alcohol and drug treatment, and chiropractic care. This KPMG study refutes the argument by many that ERISA-protected employers self-fund in an attempt to offer less expensive, bare-bones coverage.

In the 2000 session of the Missouri legislature, debate is expected to focus on business-driven efforts to protect employers from the steady stream of government-mandated health insurance benefits.

In the 1999 session, Associated Industries advocated for the establishment of a state-mandated benefits review committee that would scrutinize government mandates for cost impact and the likely level of utilization by employees.

This bill was not approved by the legislature, however, this approach will again be advanced in the 2000 session.

Associated Industries also expects bills to be debated that will provide certain protections for small businesses that may employ a worker who suffers from a costly long-term illness or disease. These high-risk individuals often cause health care premiums for an otherwise healthy group to skyrocket.

Compressing rate bands so healthy individuals pay slightly more for coverage in order to lower premiums for high-risk individuals is expected to be a part of an omnibus health care package to be debated in 2000.

Associated Industries believes that controls on government-mandated benefits, carefully designed rate band compression and efforts to expand and strengthen Missouri's existing high-risk health insurance pool could form the basis for successful 2000 legislation.

Established in 1919, Associated Industries of Missouri is a business and industry trade association which serves as the voice of Missouri business for more than 1,500 employers across the state. Associated Industries represents its membership before the state legislature, state regulatory agencies, the courts, and the public.

(Chris Long is president of Associated Industries of Missouri.)

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