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David Bauer: Insurance for employees is too expensive under the current system.
David Bauer: Insurance for employees is too expensive under the current system.

Survey: Missouri businesses fear reform effects

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Springfield restaurateur David Bauer would like to see affordable insurance for all, and he likes the idea of insurance exchanges that would allow small businesses like his to form purchasing pools, but he cannot afford to insure the employees at his three Springfield area restaurants under the current system. He is, however, among many Missouri businesspeople who are concerned about what the final version of health care reform will look like.

“My largest concern would be a mandate for all businesses to supply insurance for their employees without some kind of tax credit or incentive to cover it,” Bauer said, noting that restaurant industry profit margins simply won’t support such an expense.

A December survey by the Missouri Chamber of Commerce and industry shows that many businesses have similar concerns about health care reform, particularly in terms of an employer mandate that would require health coverage.

The restaurant and hotel industries, in particular, are worried about how health reform will affect businesses, the survey showed.

Bauer, owner/operator of Mille’s Cafe, Coyote’s Adobe Cafe & Bar and Coyote’s Nixa Grille, currently offers health insurance only for his managers. Profit margins are slim in the restaurant business – at the best of times 8 percent to 12 percent, he said – but during the ongoing recession, restaurants are lucky to have margins of 6 percent, Bauer noted.

If the government mandates coverage for his 90 full- and part-time employees without providing some way to make it affordable, Bauer said he’s in trouble.

Gordon Elliott, CEO of Springfield-based Elliott Lodging, agreed.

With 16 hotel properties in Missouri and Kansas, Elliott has an employment base of more than 300 people. Many of those employees are engaged in low-skilled jobs paying $8 an hour. With revenues down about 10 percent and staffing incredibly tight as a result, Elliott said a mandate to provide insurance to all employees – especially if it includes part-time staff – would be a job-killing blow. He estimates it would add $2 to $4 an hour to Elliott’s cost of doing business.

His solution would be to eliminate part-time staff and just have full-time workers pick up the slack in overtime, an option that he said would cost less than insuring part-time staff.

According to the chamber survey, 67 percent of Missouri businesses expect to be negatively affected by the employer mandate included in federal health care reform legislation, while only 10 percent expect to be positively affected.

The survey was faxed out in early December to 6,933 businesses – 1,920 of them were Missouri Chamber members ranging from sole proprietors to Anheuser Busch, which has more than 30,000 employees, and the remaining 5,013 went to a purchased list of Missouri small businesses that employ between five and 25 people.

“The reason we did that is that we felt like the smallest employers are the ones that are going to be most impacted by this legislation,” said Karen Buschmann, vice president of communications for the Missouri Chamber.

The survey drew 392 responses, a return rate of 5.7 percent, but because participants were promised anonymity, she could not disclose names of companies that responded.

The Missouri chamber has been active in its efforts to work with Missouri legislators to protect Missouri employers from what it calls “misguided” reforms being considered at the federal level.

“Improving the health care in our country and ensuring more Americans ar properly insured is a goal that we can all stand behind,” said Missouri Chamber President and CEO Daniel Mehan in a Jan. 21 news release in response to Gov. Jay Nixon’s State of the State address. “However, attempting to solve this problem with higher taxes and government expansion into private sectors only creates new, more troubling issues for the future.”

The survey found that nearly half of Missouri businesses polled believe the government should have a limited role in health care, while 37 percent said it should have no role, 12 percent voted for a moderate role, and roughly 5 percent said government should have an extensive role.

Other key survey findings shed light on the availability of employer-sponsored coverage in Missouri, the prevalence of expensive so-called Cadillac plans and a desire for preferred solutions within reform.  

Approximately 85 percent of Missouri employers surveyed offer some kind of health insurance. Of those companies, 76 percent offer it to all employees, 6 percent offer it to management only and 3 percent are self-insured.

Of the 15 percent of employers that said they do not offer health insurance, 66 percent cite expense as the main reason, 16 percent say they don’t offer it because employees don’t want it, and 11 percent cite the administrative burden.

Regarding penalties for not providing insurance, if an 8 percent payroll tax were charged to employers who do not provide insurance, as proposed in the U.S. House reform plan, 47 percent of businesses in the survey say they would pay the tax and 51 percent say they would provide insurance.

Only 16 percent of Missouri businesses polled offer so-called Cadillac plans – defined as those with annual costs of $8,500 or more for an individual or $23,000 for a family of four –that might be subject to taxation under reform. Analysts note, however, that a high-cost plan is not necessarily one that provides generous benefits, as many of the most expensive plans are those that cover the elderly or disabled.

Hotelier Elliott said he sees nothing good in the health care reform proposals being touted on Capitol Hill, and wonders why solutions such as tort reform and allowing insurance companies to compete across state lines are being ignored.

While survey respondents indicated a preference for alternative solutions including tort reform, they also mentioned other options such as tax credits to pay for insurance, association plans and health information technology updates. And 5 percent of respondents indicated support for a government-run public option for health care.[[In-content Ad]]Though the Missouri Chamber of Commerce could not disclose names or individual companies that participated in the survey, it did share some of the surveys with Springfield Business Journal. Here are some of the respondents’ comments.

On following reform talks:
“I do not understand most of the federal health care legislation.” —Nonprofit that does not offer insurance to seven full-time and five part-time employees

On the government’s role:
“Get the government out of health care, and let the marketplace take care of the problem.” —Employer that offers insurance to 13 full-time and 20 part-time employees

“I believe government-run health care is inevitable. Therefore, the sooner the better. Insurance companies bring no value.” —Employer that offers insurance to 50 full-time and 10 part-time employees

“The federal government should not be involved in our country’s health care system except for enacting legislation to address tort reform.” —Employer who offers health coverage to 220 full-time and 60 part-time employees

On possible fixes for U.S. health care:
“First try a solution that costs nothing to try. Allow insurance companies to cross state lines for optimal cost benefit and competitiveness.” —Employer of 40 full-time workers

On the impact of reform:
“I know this: If my company is mandated to provide insurance on my employees, an iced tea will now cost the general public about $3.50. Great for business,” —Employer with 32 full-time and 32 part-time employees who does not offer health insurance because it is too expensive.

Source: Missouri Chamber of Commerce 2009 Survey of Missouri Employers on Health Reform

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