[T]he Senate approved an $11 million health care package Thursday that would restore exchange subsidies cut in the base budget and fund initiatives meant to strengthen primary care and mental health services.
It mirrors much of what is in a House-passed package the lower chamber tacked onto a Senate bill, S.139, with lower funding for Medicaid primary care rates and Vermont Health Connect subsidies, but contains increases for dental and mental health services the House version does not.
The Senate package is paid for with a tiered increase to the employer assessment, which was included in the Senate tax bill. The increase raises $5 million, which would receive a $6 million match. The House version raises $12 million by expanding the state sales tax to include candy and soda and increases to tobacco taxes.
Increasing the employer assessment is unpopular with some Vermont businesses that say it increases costs at a time they are struggling with increases to the minimum wage and scrambling to compete with larger national brands.
Other Vermont companies, many of which are represented by the trade group Vermont Businesses for Social Responsibility, say the employer assessment levels the playing field between businesses that offer health care and those that don’t.
The two tax options to pay for health care are likely to be reconciled in a committee of conference on the tax bill. The spending and a litany of policy provisions in the Senate and House health care proposals are likely to be reconciled in a separate conference committee.
The policy provisions focus on expanding the authority of the Green Mountain Care Board and setting guidelines for anticipated reforms to how health care providers are paid and how they deliver services.
The employer assessment is a quarterly tax on full-time equivalent (FTE) employees who are not offered a health benefit, don’t use their employers’ health coverage or are covered by Medicaid. It’s currently a flat rate of $140 for businesses, with the first four uncovered FTEs exempted.
Under the Senate proposal, businesses with 50 or fewer FTEs would be exempt from the increase. For those with more than 50 FTEs but fewer than 250, the quarterly payments would increase from $140 to $228; for businesses with more than 250, it would increase to $319 — 62 percent and 123 percent increases, respectively.
That’s concerning for Mike Comeau, who owns three markets in Richmond, Johnson and Waterbury. His business would fall into the 50 to 250 FTE category and the increase could potentially force him to lay off workers, he said.
Comeau offers his full-time employees health insurance, but some don’t take it because they have coverage through a spouse, or — more often now that income eligibility has increased — Medicaid. He can’t increase his prices any further or he won’t be able to compete with larger, national chains, Comeau said.
“I only have one controllable cost in my business and that’s labor,” he said.
Those national chains are also more likely to be able to afford the increased assessment, putting his business at a further disadvantage, he said.
At the same time, this is the first year the federal Affordable Care Act will tax businesses with 50 or more FTEs on the same basis, meaning the increased employer assessment would be on top of a new federal tax for many businesses. Added to all that are yearly increases in premiums for his covered employees, Comeau said.
He would prefer the employer assessment not be increased at all, but if the Legislature moves forward with an increase it should be across the board, Comeau said. The number of FTEs a business has isn’t an indicator of whether it’s profitable or struggling to make payroll, he said.
Spreading the increase across all businesses would be more equitable, he said.
Dan Barlow of Vermont Businesses for Social Responsibility, which supports increasing the employer assessment, said Comeau has a point that the number of FTEs isn’t necessarily an indicator of a business’s health.
But he said the employer assessment would still be less than paying premiums for uncovered employees. Most VBSR members offer a health benefit, and while it’s not perfect, the employer assessment helps to level the playing field between those businesses and others that don’t offer health coverage, he said.
“Quite frankly, VBSR would like to see health insurance decoupled from employment altogether, but that’s just not the system we have now,” Barlow said.
