Public Policy Detail
April 26, 2007
Testimony at House Committee on Health Care
In support of H.304 – Vermont Hospital Security Plan
- Don Mayer CEO- Small Dog Electronics
- Chair- Vermont Businesses for Social Responsibility
My name is Don Mayer. I am the CEO of Small Dog Electronics of Waitsfield and S. Burlington, a $20 million dollar reseller of Apple Computer products that employs 41 Vermonters.
I am also here today in my role as the chair of Vermont Businesses for Social Responsibility. VBSR is a state-wide business organization with over 650 member companies. These members employ about 10-12% of the state’s workforce and contribute approximately $4 Billion annually to Vermont’s economy.
If there is one issue that unites our membership it is the absolute need for REAL health care reform. Since 1992 VBSR has adopted and promoted policies that make the case that health care and health insurance are economic development issues. We see a system rife with inequities, rapidly escalating costs to our businesses and a “system” that is unsustainable for Vermont.
VBSR has polled our members on health care this year. In our policy survey in Jan. 2007 37% of the respondents for this question responded that insurance premiums have gone up at least 20% or more in the past few years. 75% of the respondents have had premiums go up at least 11%.
The rising cost of health insurance premiums is perhaps the single most uncontrollable element of business overhead and is forcing Vermont companies to make difficult choices like dropping or reducing coverage. When this happens, the costs of health care is either absorbed by the business, or shifted to families, state programs, or back onto those who are insured and those employers who continue to provide insurance. In our survey, 67% of the businesses said they are absorbing some or all of the rising costs, 41% said they chose a plan with a higher deductible, and 22% were forced to increase the employee’s contribution to the plan.
Increased health insurance premiums means businesses have reduced capacity to invest money in their business for expansion, to raise employee salaries, or to increase other benefits like retirement plans, etc. Economic development in our state is very closely tied to the solution of this worsening problem.
We applaud the legislature for their efforts with Catamount Health, however; you as our elected legislators, can only say that you have completed your work on health care reform when every Vermonter has equal access to health care regardless of employment, marital or economic status.
For our health care system to work, all must contribute and all Vermonters must have access to quality health care. Even the token Catamont assessment for companies that do not provide coverage has been fought by those who are an unfunded burden on our strained health care system. For those of us that write checks each month for employee’s health care, we can only chuckle (or cry) and shake our heads when someone complains about $360 when we write checks for $11,000 a year for an employee and their dependents!
As a businessman that provides health care coverage for my employees, I know very well about the rapid escalation of the cost of providing health care for my staff. When I first started in business over 30 years ago, when I founded Northern Power Systems, I was able to cover an employee and dependents for about $1500 a year. Today, coverage that is not even as comprehensive will cost me in excess of $11, 000 a year.
The employer has become the “payer of last resort,” picking up the costs of uncompensated provider care, whether it results from inadequate reimbursement rates or inadequate insurance coverage for people needing health care. As a business owner, no longer do I make hiring decisions based solely upon my company’s need for growth and development. I must consider carefully the impact of the rapidly escalating health insurance premiums as I make each new hire. Some of our member have had premium increases of over 25% this past year, alone. Sometimes the cost of those “taxes” can equal 50% of an entry-level worker’s salary.
I have intentionally used the word “taxes” because in the health care debate it really all comes down to money. Businesses that do the right thing are paying a health care tax to insurance companies.
The dollars I need to spend on providing health care to my employees, who could not get affordable coverage in any other way is a tax, call it a premium but it barks just like a tax! It’s a standing obligation I have, is my contribution to a defined social need. But the “health care insurance tax” that I pay is very different from the other taxes I pay. Unlike other taxes, a) not everyone pays this tax, although everyone benefits from it; b) there is no rational allocation of the tax burden; c) the burden is not distributed through a transparent democratic public debate process; and d) as a “health insurance taxpayer” I have no influence on the administration or governance of the public good that is funded by the tax. I would much rather pay taxes that are determined through a democratic process, with democratic oversight of the disbursement and delivery system, to fund health care, than continue to be subject to unpredictable, opaque and rapidly escalating health insurance “taxes”.
Additionally, employer-funded health insurance has impacted the competitive marketplace, making the decision NOT to provide coverage a strong competitive advantage in bidding for contracts. Employers that do not provide coverage shift their employee’s health care costs to those of us who choose to act responsibly, thereby doubling the adverse competitive impact. Other employers hire part-time or seasonal workers to avoid this premium/tax, still others “dumb down” coverage with very high deductibles and limited coverage that encourages Vermonters to avoid medical care even for chronic conditions.
The lack of affordable health care options for small businesses and startups provides a disincentive and risk to a sector of the economy vital to starting new growing enterprises and hence to job creation.
Ending the employer-based funding of health care will stimulate economic development by reducing the tendency of employers to offer part-time jobs to avoid health care costs, will give Vermonters the freedom to change jobs without fear of loss of health benefits and will eliminate this contentious issue as a labor-management dispute.
We believe that many of the fundamental principles that help make a business successful, have relevance in the design of structural change in the health sector. These include: having a clear vision and statement of the ultimate goal, doing one’s best to assure that interim steps actually lead toward that goal, choosing the most cost-effective means of delivering a service without compromising quality, and assuring that the needs of the greatest potential number of “consumers” or users of the services are being properly addressed.
VBSR believes that a health care plan for Vermont should include these elements:
- Universal coverage and access
- Cost management to provide accountability and sustainability
- An integrated system of care (wellness, preventive, medical, surgical, emergency, rehabilitative, and behavioral health care must be included).
- Promotion of healthy behaviors and prevention
- An equitable funding mechanism that takes into account the contributions already made by business
- A publicly-funded system that de-couples health care from employment
H.304 Vermont Hospital Security Plan is a giant step in addressing a failing and unsustainable health care system in our state and in providing an economic climate in our state that will encourage our wealth of entrepreneurs to create and expand businesses and strengthen our economy.
I urge you to take this next important step in leadership by providing every Vermonter with the security of knowing that should accident or illness enter their lives, that in OUR state we see taking care of our citizen’s health as a public good in which we all share responsibility.
Thank you for this opportunity to share our thoughts with you on this important legislation. Keep up the good work!
