Sweeping health care law will impact Cape businesses
Under a new Massachusetts universal health insurance law, Cape Cod businesses face a dilemma beginning later this year: offer health insurance or pay a $295 per-employee annual fee. Larger employers already providing health benefits will see little immediate impact. The smallest firms with no more than 10 employees are exempt.
Most affected will be hundreds of seasonal businesses, restaurants, motels, shops, cultural organizations and other Cape firms with 11 or more workers. They must pay the fee or contribute to health insurance, now costing as much as $600 per month per worker.
For many businesses, paying the fee will be a substantial new expense, though the less expensive option. To avoid the issue, some businesses will limit their hiring to no more than 10 employees.
Despite Governor Mitt Romney’s veto of a provision in the historic universal health insurance law that would impose the fee for businesses that don’t provide insurance, the Legislature is expected to override him.
Romney called the $295 assessment “such a small figure” that “it doesn’t have any significant incentive value” to encourage businesses to provide coverage because it is much less than the actual cost of insurance.
“There were many businesses that have been flooding my office with calls, as well as business associations, that were very concerned about it,” he said.
Most observers consider the governor’s veto symbolic. The intricately negotiated legislation, according to most Legislative leaders, depends on all parts of the arrangement remaining intact.
Business leaders expressed guarded responses to this sweeping, untested law that is unlike any other in America. “The first insight is that jobs will certainly go under the table in some respects, and those companies at the nine-employee point might just stay there,” said Wendy Northcross, CEO of the Cape Cod Chamber of Commerce.
Tony Shepley, president of Shepley Wood Products, said “As an employer of a 160 people and one who covers the majority of the cost of this insurance, I can’t really say I object to this. Currently those uninsured go into the free care pool, which the rest of us end up paying for in the form of higher medical fees. So this approach, while not perfect, attempts to more equitably spread the cost of health care over all those who use it.”
The plan requires nearly all 6.4 million Massachusetts residents to have health insurance by July 1, 2007. For most workers, income used to pay for health insurance will be exempt from the state income tax. Those who can afford insurance but do not buy it face penalties starting at $150 when they file state income tax returns.
The law creates an authority, the Commonwealth Health Insurance Connector, to encourage health insurance companies to create lower-cost insurance policies and help businesses and individuals buy them.
The law is intended to reduce the 500,000 Massachusetts residents (including more than 20,000 on Cape Cod) who are uninsured. One goal is to diminish the need for hospitals to provide uncompensated care. Cape Cod Healthcare, which operates hospitals in Hyannis and Falmouth, anticipates that fewer patients lacking insurance will appear at its doors, thus lowering its burden of providing free care. Payments for low-income Medicaid patients also are scheduled to increase.
Under the law, subsidized insurance plans will cover hundreds of thousands of residents, including the Commonwealth Care Health Insurance Program for people earning below 300 percent of the federal poverty level ($48,000 for a family of three). Medicaid health care for the poor and disabled will cover children up to 300 percent of the federal policy level, and their parents can buy individual or couples policies.
The law takes effect July 1, 2006, though Section 47 imposing the new employer assessment is effective Oct. 1, 2006.
For further information and full text of the legislation, House No. 4850, go to mass.gov/legis/ and click on the Health Care Conference Report.
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