Cape Business Trends newsletter November 21, 2006
Majority support new health insurance law, even if it means higher taxes
Six out of every 10 Massachusetts residents support the state’s new health insurance law, even as they expect taxes to go up as a result of it.
At the same time, a survey by Blue Cross Blue Shield of Massachusetts finds that very few residents are informed about the new law’s details. “Knowledge of the law is not deep, so we clearly need to do broad public education to build on the strong support for the law that exists,” said Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation, which funded the statewide survey.
Businesses with more than 10 employees will be required to offer health insurance or pay an annual fine of $295 per employee.
Of people surveyed who had been uninsured at some point in the past year, 42 percent said the law will help; 30 percent said it will hurt and 26 percent said it would not have much impact. Only a slight majority – 52 percent of those surveyed – said they support the idea that people should be required to have insurance or pay a fine.
Business leaders complain that companies employing part-time and seasonal workers remain uncertain how the law will affect them. Employers also wonder how much their expenses will increase if employees who are eligible to get insurance through them, but now choose to go without, suddenly start signing up to comply with the law’s requirements.
To learn more about the poll and what experts across the state are saying about the new law, click here.
Health insurance providers are still uncertain, however
What if companies do comply with the state’s new health insurance law, but providers refuse to make the coverage available?
That well could happen.
The law exempts employers from an annual assessment of $295 per employee if one-quarter of their workers participate in a health plan, or they contribute one-third of an employee’s individual premium.
But Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care say the state set that requirement too low. They want higher participation rates and bigger employer contributions.
“Blue Cross Blue Shield of Massachusetts expects employer contributions to premiums to be 50 percent,” said spokesman Chris Murphy. “That level of employer contribution creates the largest, most stable pool of employees to share risk,” he told the Boston Globe.
Charles Baker, chief executive of Harvard Pilgrim Health Care, said his company requires more than 50 percent of a firm’s employees to participate in a health plan. And employers that make meager contributions to premiums won’t be able to get enough workers to sign up, he said.
Among Massachusetts employers, the median contribution level to employee health-care premiums in 2005 was 77 percent for individual policies and 75 percent for family plans, according to a state study.
Typically, a small number of seriously ill employees account for most medical expenses in a company health plan, insurers said. The higher the rate of participation, the easier it is to estimate annual expenses and to minimize premium costs.
Stay tuned.
What will tomorrow’s workforce look like?
A new study by the Nellie Mae Education Foundation suggests some challenging times ahead for employers recruiting and retaining young workers. Among the study’s key findings:
• Massachusetts and Connecticut will suffer the largest drops in the percentage of young workers holding a bachelor’s degree or higher. The Bay State’s forecast calls for a decline from 43 percent in 1993 to less than 40 percent by 2020.
• There will be marked declines in the size of the working-age population in Massachusetts, Maine, Connecticut and Rhode Island.
• All six New England states will witness dramatic increases in the percentage of their workforces composed of minorities. For example, 28 percent of the Massachusetts working-age population will be minority by the year 2020 – up from 15 percent in 2000.
• An expanded minority presence in the workforce will be especially visible among young workers. By 2020 nearly half the 25- to 29-year-olds in Massachusetts, Connecticut and Rhode Island will be minorities.
New $5 million challenge grant attracts another $1 million for Cape Cod Hospital
Having helped develop the Cape Cod Mall and Red Jacket Inns on Cape Cod, David Mugar is making an indelible imprint on the health care front with his second $5 million challenge grant to complete the Cape Cod Hospital tower.
Mugar’s latest challenge gift, announced last week, led immediately to a $1 million grant from Richard and Doris Sellers of Osterville.
While two of the tower’s four patient-room floors are complete, providing 60 new private rooms, the top two floors will remain a shell until the hospital can gather in a total of $17 million more to complete the work.
It collected more than $12 million on top of Mugar’s original $5 million. Eventually, the entire project will carry a $38 million cost. The new beds are the first to be added to the Hyannis facility since 1976.
The new wing, of course, is named after Mugar.
A rising tide for construction
While the latest housing slowdown is sure to have an impact on the construction industry, this vital segment of the Cape economy will be adjusting from a position of significant strength.
From 2001 to early this year, construction employment on the Cape has risen at a stunning pace. Here are some examples:
• Total employment: 2001– 5,163; 2006 – 5,914
• Residential building: 2001– 1,107; 2006 – 1,634
• Building equipment contractors: 2001– 1,293; 2006 – 1,537
• Specialty trade contractors: 2001 – 550; 2006 – 643
In terms of actual new construction businesses arriving on the scene:
• Residential builders: 2001 – 297; 2006 – 363
• Building finishing contractors: 2001 – 145; 2006 – 190
Those numbers probably have peaked, and industry insiders expect to see a contraction due to the housing slowdown.
Inflation news and the housing market
Producer prices last week fell by the biggest month-over-month decline ever, suggesting that a positive inflation picture should lead to an easing cycle by the Federal Reserve.
Eventually, this should prove to be good news for the swooning housing market. Lower interest rates on top of lower home prices will stimulate sales.
Of all sections of the nation, the Northeast appears to be holding up best when it comes to housing construction and home prices, according to the latest national statistics.
Right now, buyers have the clear upper hand in the housing market, but if inventories continue to drop on the Cape, we might see equilibrium between supply and demand sooner rather than later.
Consider that there were about 6,900 properties on the market as recently as August 22 across the entire Cape. As of this week, that number has dropped to 6,217. Not all this improvement is due to sold homes; many properties were voluntarily taken off the market because buyers could not get their price.
But eventually, cheaper money and fewer properties – along with the continued baby boom bubble – make it clear we aren’t in for a repeat of the late 1980s housing recession.
Canada's TD Bank to become sole owner of TD Banknorth
Canada's TD Bank Financial Group is poised to become the sole owner of TD Banknorth after the boards of both banks agreed to TD Bank's $3.2 billion offer for its remaining stake in the U.S. subsidiary.
The Toronto-based company already owns 57 percent of TD Banknorth, a regional banking company based in Portland. The offer price of $32.33 per share for the remaining 43 percent represents a 6.5 percent premium over Friday's closing price on the New York Stock Exchange.
After the deal closes, TD Banknorth will become a wholly owned subsidiary of TD Bank. The transaction, subject to stockholder approval as well as approval from the Massachusetts Board of Bank Incorporation, is expected to close in March or April 2007.
Upcoming events
Now that Cape Business Connect 2006 is over, what's next on the business calendar? One not-to-be-missed event is the Century 21 Tassinari Business Conference being held Nov. 29 at the Radisson Hotel Plymouth Harbor. Dr. Michael Goodman, a leading expert on the Massachusetts economy, and Dr. Leo McManus, an authority on management succession planning, will speak at the conference. They will discuss future trends and opportunities impacting on local and regional businesses.
Sponsored by the Century 21 Tassinari Group in association with Court Street Insurance and Cape Business Publications, the lecture series was developed for business leaders, banking executives and real estate professionals to learn more about economic and industry issues across the region. This free program is open to the public but reservations are required. To reserve a space, call 508-746-1222.
For more on this event, or to learn about other upcoming events, check the Cape Business Calendar -- bookmark this page as the calendar is updated daily!
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