FROM:            Bill Vernon, State Director

RE:                   Weekly Update

DATE:             August 15, 2008     

Beacon Hill Report

Happy Sales Tax Holiday (August 16-17)

·        Healthcare cost containment bill a step in the right direction

·        NFIB asks Governor to veto healthcare fee increases on small business

·        Did the pro-environment agenda go too far?

Health Insurance

Characterization of the recently completed legislative session as one of the worst for economic development and job growth in recent memory is generally accurate.  But one of the final bills of the session was one of the more positive developments.  Actually passed after the midnight deadline, the healthcare cost containment legislation has received press attention because of its provisions requiring pharmaceutical and medical device companies to report gifts or meals given to healthcare providers in the promotion of their products.  But other provisions in the bill spearheaded by Senate President Murray are more important to small business owners due to the impact on health care costs.  The legislation requires healthcare providers to maintain computerized medical and billing records (at a cost of $25 million to taxpayers!), offers financial incentives for sorely needed primary care physicians, and forces insurers to justify higher premiums in a public hearing.  The problem of healthcare costs needs further work - insurance product flexibility, more consumer choice, and expanded transparency -- to make the state's health reform economically sustainable but this is a first step in the right direction.             

Health Insurance Reform

As noted in last week's report, the legislature sent to the governor legislation that will increase the fees paid by businesses to fund the state's health insurance reform law. NFIB joined with other business organizations in asking the Governor to veto the bill .  The business coalition was successful in having the legislature remove a section of the bill that would have directly increased the $295 'fair share' fee paid by employers.  But provisions that require employers to report health care information to the state and pay any fees due on a quarterly basis (instead of annually) and that raid the employer-funded Medical Security Trust Fund remain.  The quarterly payments section will increase the paperwork and administrative burden on all companies while substantially increasing the number of companies required to pay the fee.  Companies that hire seasonal or part-time employees will be particularly vulnerable.  No one can predict the actual impact of these changes and regulatory changes expected in September, but the administration hopes to raise more than $30 million in new revenues from employers, many of whom already offer insurance to their current employees.  The legislation also authorizes a $35 million raid on monies collected through a $16.80 per employee per year payroll tax to fund health insurance for unemployed workers.

In addition the Governor has formally proposed regulatory changes to expand the applicability of the $295 per employee fee to thousands of additional employers, many of whom already offer health insurance to their employees.  Currently employers avoid the $295 'fair share' fee IF 25 percent of their full-time workers participate in their health plan OR the employer pays 33 percent of the premium.  The new rules would require employers to satisfy both tests to avoid the fee beginning October 1.  The regulatory changes would also implement quarterly filing and collection of fees.  Employers of part-time and seasonal employees, especially in the tourism, food service, and retail industries, would be particularly affected.  The public hearing on the proposed regulatory change will be held on September 5. 

Session Review: Environmental Issues

While small businesses may be disappointed in the legislature, environmental advocates are jubilant in their assessments of the just completed session.  The question is whether the pro-environment agenda went too far.  Five major environmental bills were enacted.  The Green Communities Act (promotes energy efficient products and encourages renewable energy technologies), the Oceans Act (supports development of wind, wave and tidal power generation while protecting state waters), Biofuels Act (tax exemption for biofuel, establishes minimum percentages of biofuel in diesel and home heating oil), Global Warming Act (requires 10-25 percent reduction in 1990 levels of greenhouse gases by 2020 and 80 percent reduction by 2050), and Green Jobs Act ($68 million for research and development and training for jobs in the clean energy sector).  Many employer and trade associations contend the new laws will further increase the costs of electricity, fuel, and energy in an already high cost state as employers seek to satisfy expensive and perhaps unattainable goals without an appreciable favorable impact on the global environment.     

This list does not include the $1.75 billion bond bill for capital improvements in state parks and open space.  Legislation and regulations affecting use of toxic chemicals in manufacturing and the levels of lead contained in jewelry sold by MA retailers are still pending.