House Majority Policy Committee
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House Majority Policy Committee Hearing Testimony of Jim Becker, President of Access Technologies March 28, 2007 Representative Eachus and members of the committee, my name is Jim Becker. I am president of Access Office Technologies. Our team of employees has been servicing the Northeast Pennsylvania private, government and education community for over 27 years from our Stroudsburg location. I also am a member of the National Federation of Independent Business. Joining me today is Kevin Shivers. Kevin is NFIB's state director. NFIB represents a broad range of small employers and independent businesses in virtually every sector of Pennsylvania's economy. Our typical member employs five or fewer workers and generates annual sales of about $400,000. Thank you for inviting us to talk with you today about solutions to address the challenges faced by small-business owners who are trying to gain access to affordable health insurance. Finding affordable and quality health care options is not a new problem for small businesses. Health-care costs are the number one concern for small business in Pennsylvania and around the country. Additionally, small-business owners and employees are acutely aware of the hardships faced by those without health-care coverage. Nearly two-thirds of working Pennsylvanians with no health insurance are in some way tied to a small business. Additionally, the small-business community pays, on average, 18 percent more in health insurance premiums for the same benefits as those in the largest firms. Over the last several years, NFIB members have reported premium increases, on average, ranging from 25-50 percent. As a result, many businesses have been forced to either shift the cost of health-care to the employee or drop health-care coverage altogether. We understand that no one solution will help all uninsured Pennsylvanians cover their health-care costs. NFIB members believe the most effective way to reduce costs and increase the availability of quality health care is to create an environment that fosters robust competition in the marketplace. Our members also believe that any plan that seeks to help the uninsured must first address the root causes associated with rising insurance premiums, including administrative inefficiencies, the lack of competition, the lack of bargaining power, the cost of litigation and government imposed mandates. About 20 to 25 percent of a small employer's health insurance premiums cover administrative costs. Similar administrative costs for large employers average much less, about 10 percent. Due to their size, small businesses cannot spread their risk across a large number of workers, thus their bargaining clout is significantly reduced, resulting in higher prices for insurance. Mandated health benefits also raise the cost of insurance. In Pennsylvania, there are more than 30 mandated benefits. As additional mandates are included within an insurance policy, the risk associated with those insurance claims begins to be passed on to the insured population. Every time a mandated coverage is added, regardless of how well intentioned, medical costs go up and more Pennsylvanians become uninsured. In Pennsylvania, the Blue Cross/Blue Shield plans cover the vast majority of Pennsylvania's small-group insurance market. This week, the state's largest insurance companies announced plans to merge -- further reducing the number of competitors in the marketplace. More needs to be done to increase competition within the insurance market. Our members pledge to do all we can to work with the General Assembly and the administration to find real solutions to this problem. We recommend a multi-faceted, consumer-focused approach to improve access to affordable health insurance and allow more Pennsylvanians to purchase health insurance at prices they can afford. NFIB's approach has four specific steps: 1. Tax-based incentives -- NFIB members support tax-based incentives that encourage fairness and equality for everyone purchasing health insurance. Tax credits help level the playing field with larger businesses by providing incentives for small-business owners to offer health care. 2. Cost containment measures -- Increased transparency, improving health information technology (IT), lawsuit abuse reform and limiting mandates are essential components to contain costs. 3. Pooling -- Increasing the size of the pool will help increase bargaining power and decrease administrative costs, which will increase coverage. 4. Allow insurers to offer basic health plans for employers with 50 or fewer employees -- Such policies would be exempt from most state mandates. This low-cost option would allow small-business owners who don't provide coverage an initial step into the marketplace. This policy would be low-cost, yet at the same time provide a sufficient level of basic health care. Health care is the only major sector of our economy where consumers and providers have virtually no useful information on the true costs of medical goods and services. Consumers lack the pricing information they need to make informed decisions about their health care. The cost of malpractice lawsuits has soared in recent years, pushing up insurance premiums and forcing physicians out of business. Although plaintiffs win less than 2 percent of all medical liability claims, each case costs an average of $25,000 to defend. For those plaintiffs who do win, the median award jumped 43 percent in 2000. When looking at the value of mandates there is a difference between what people want and what they need. There is a difference between the values of a woman's access to a mammogram versus everyone having access to hair transplants.
Giving small-business owners the ability to band together to
purchase health insurance will give these small firms the same access to
affordable health care that unions and Fortune 500 For the last several years, NFIB has advanced consumer-focused health-care options that are proving to provide greater access to affordable health insurance. Last session, Pennsylvania took a positive step in that direction.
With the
support of the members of this committee, Pennsylvania made consumer-focused
health plans like Health Savings Accounts (HSA's) a permanent and tax-free
option in Pennsylvania. Furthermore, 41 percent of HSA purchasers in 2005 were previously uninsured and one third of small-business owners who previously offered no insurance to their workers now provide coverage through HSAs.
Some of the
common myths about HSA's being for the rich or the very young are also being
dispelled. About 42 percent of HSA subscribers are at least 40 years old or
older and almost 50 percent have an annual income of $50,000 or less. An added
benefit of consumer-driven health Our members certainly appreciate the Governor's efforts to shine a spotlight on the struggle that small-business owners are facing in trying to gain access to affordable health coverage. Clearly, something needs to be done to reduce the cost of health insurance and health care. But more government regulation and more taxes are not the answer.
During
briefings held by NFIB in February, small employers raised numerous concerns
about the governor's Prescription for Pennsylvania. These employers were
particularly concerned about the proposed 3.5 percent payroll tax on all
employers; the administrative costs that small-business owners will be forced
to pay in order to comply with the new health mandate; the cost and manner The governor's plan seeks to address two cost drivers -- medical errors and hospital acquired infections. But efforts to reduce other cost drivers, like lawsuit abuse and health mandates, and administrative costs are missing -- not to mention the negative impact that rating restrictions would have on efforts to foster more competition and innovation within the market place. Eighty-five percent of NFIB members oppose a payroll tax on employers who do not provide health insurance. Under the governor's plan, employers who don't offer insurance and who are required to pay the payroll tax would receive no guarantee that they or their workers would get coverage under the state program. In fact, while there currently are 750,000 uninsured Pennsylvanians, the governor's plan only provides coverage to 150,000 Pennsylvanians in the first year, and only covers 450,000 by 2012.
Healthcare
is a benefit our company has provided for over 20 years. We have continually absorbed
price increases but managed to maintain the benefit for our employee team. First,
I believe it is the right thing to do. Second, it puts us on the same
level with much larger companies when
We
currently fund 100 percent of our plan. Why would we -- a Pennsylvania
company who has When I asked the Governor this question directly he failed to answer stating only that my benefit would be in future premium reductions my insurance vendor would offer me. I'm still trying to understand that answer and his philosophy as there has never been a premium reduction in any type of insurance policy -- health or otherwise -- that I have ever owned.
Can any of
you shed some light of how that would happen and if so how long I will be
paying more Thank you for the opportunity to appear before you today. We are happy to answer any questions that you may have. |
