There is no question that the spiraling cost of health insurance pose a huge threat to our small businesses. The average small group premium in Kansas is currently over $10,000 for a family and $3,800 for an individual.
Small business owners who want to provide this benefit to their employees are increasingly having to reduce their contributions or cut down on benefits to afford to do so. Some have been forced to drop their coverage altogether, contributing to Kansas’ rising uninsured rate over the past few years.
We know that the primary driver behind the rising costs of health insurance is the rapid increase in the cost of health care- medical inflation is rising much faster than general inflation.
Clearly, reducing these costs should be one of, if not the primary, goal of health care reform. Unfortunately, according to the Congressional Budget Office (CBO), none of the health care reform bills currently before Congress address this goal in any meaningful way.
Until we get health care cost trends under control, health care reform will exacerbate, rather than solve, our current problems.
Sadly, both this Committee and the Finance Committee have failed to recognize this truth. Instead we have a partisan bill that was written behind closed doors by the Majority Leader that takes the completely wrong approach.
In a letter to Chairman Baucus, CBO stated that “premiums in the new insurance exchanges would tend to be higher than average premiums in the current-law market.”
In addition, other non-partisan entities from the Joint Committee on Taxation, to the CMS Office of the Actuary, to the National Association of Insurance Commissioners have all come to the same conclusion: the health care reform bills currently before Congress will actually result in higher premiums and higher costs for small businesses and individuals.
For this reason, I am glad Chairman Harkin decided to call this hearing today. I hope that our witnesses can persuade this body to restart the health care reform process and to instead take a step-by-step approach that focuses on lowering the cost of health care for small businesses and for all Americans.
I want to welcome our panel; thank you all for being here today. I’d like to take a minute to specially recognize my home state Insurance Commissioner, Sandy Praeger, who is here today to share her considerable expertise with this Committee.
Commissioner Praeger has been an invaluable resource to me and to my staff, and I am always proud to have her address this panel.
She has also contributed significantly to efforts to educate the public about health care reform, something for which all Kansans should be grateful.
The HELP bill provides credits on a sliding scale to small businesses with 50 or fewer employees with average wages of no more than $50,000, while the Finance bill limits its credits to small businesses with 25 or fewer employees with average wages of no more than $40,000.
Kansas has a lot of small businesses– 60,000 in fact. They provide all sorts of goods and services, from airplane parts to farming to health care, and they are a major driver of the Kansas economy, accounting for almost 97% of the state’s employers.
However, under these health care reform bills, I believe most small businesses in Kansas will be saddled with the higher premium costs without having the benefit of the tax credits.
I’m also very concerned that these tax credits will create a disincentive for small businesses to grow, both in terms of employees and in terms of wages.
