WASHINGTON, May 4 (UPI) -- What started out as a House hearing Thursday on state laws requiring employers to provide employee health insurance turned into a debate on the role of government in providing healthcare.
At the House Subcommittee on Employer-Employee Relations, Republicans and business representatives argued that state insurance mandates raise the cost of healthcare and cost people their jobs, while Democrats defended the "fair share" laws, saying they require employers to be responsible and ease the burden on state healthcare safety nets.
"Employer-provided health insurance is a benefit to the employee, it's not mandatory," said subcommittee chairman Sam Johnson, R-Tex., comparing state benefits mandates to World War II-era price controls. "Governments who value freedom and free enterprise do not tell businesses how to operate."
Johnson then criticized a law recently passed in Maryland -- now the model for proposed legislation in 30 states and localities -- which would require businesses with more than 10,000 employees to spend the equivalent of 8 percent of payroll on employee healthcare or pay into a state fund to help low-income individuals get care.
"These proposals largely ignore the problem of skyrocketing insurance costs and instead simply add additional burdens on employers -- and their employees, who may end up with the short end of the stick," Johnson said.
A better solution than mandates, he added, would be the Bush administration proposals of Association Health Plans (AHPs) and Health Savings Accounts (HSAs).
But Rep. Donald Payne,D-N.J., defended state employer mandates, saying, "I would love to see this Congress do something to really address the rising cost of healthcare and find creative ways to cover those people who can't afford it. But until that happens, we must not stand in the way of the states who are working hard to come up with ways to provide their citizens with quality, affordable healthcare."
As many as 18,000 Americans die each year because they can not afford healthcare, according to an Institute of Medicine report, he said.
On behalf of the Employment Policies Institute -- a business-backed think-tank studying public policies surrounding entry-level employment issues -- researcher Craig Garthwaite said such laws ignore the real problem of the rising cost of healthcare, and are instead an example of "the most blunt of political instruments possible, simply requiring someone to pay for it."
The institute's research, he said, has found that state mandates do not address the issue of the uninsured but instead deny the reality that many of the employees affected are young, part-time or not primary family breadwinners and do not want insurance through their employer.
HSAs, coupled with high-deductible catastrophic insurance, would be a better fit for the needs of these groups, Garthwaite said.
Allowing states to create differing mandates creates a "hodgepodge of complex and conflicting regulations" that discourage employers from providing insurance, said Paul Kelly, senior vice president of the Retail Industry Leaders Association (RILA), which has lobbied heavily against such bills in state legislatures and also filed two lawsuits against fair share laws in a New York municipality and in Maryland.
The primary deterrent to small businesses providing insurance for employees is cost, said Larry Drombetta, owner of a small shoe store chain, on behalf of the National Retail Federation, and simply mandating coverage will not make healthcare cheaper.
Legislation allowing him to group with other small businesses to negotiate lower health insurance rates would help more, Drombetta said, pointing out that his company's healthcare costs have increased by 155 percent over the last six years.
"States that pass mandated healthcare legislation should not be surprised to see job losses, higher prices, fewer new stores, limited store hours and services as well as diminished tax revenues," he said. "You can't deficit- spend a small business, it's called bankruptcy."
But simply because businesses do not cover healthcare costs does not mean that those costs go away, said Mila Kofman, professor at the Georgetown University Health Policy Institute.
"Healthcare is expensive because medical care is expensive," Kofman said.
When individuals without insurance seek uncompensated care at emergency rooms and elsewhere, she said, the cost is shifted to people with private insurance, which just ends up increasing insurance premiums for employers and employees.
State mandates, "will help employers because there will be less cost-shifting," she said.
Employers who do provide insurance will also benefit from mandates, because they no longer have to unfairly compete with businesses who do not, she said.
And even with HSAs and AHPs, there will still be sick people who need coverage, she said. "You're not going to have insurance companies -- no matter what the rules are -- competing over sick people."
Although Congress does not have the authority to override all such state laws, states are limited by federal ERISA laws, which define state jurisdiction of self-funded employer insurance.
If states are interfering with federal ERISA laws, which limit states' ability to regulate employer-offered benefits, "we must make sure that the results are fair and have no unintended consequences -- or worse -- giant problems in the future," Johnson said.
The ERISA laws are currently strong enough to keep states in check, especially if the anti-fair share lawsuits are successful, RILA's Kelly told United Press International. But there is some concern that these laws could be eroded, increasing states' ability to impose requirements on businesses.
To proponents of the state initiatives, however, the ERISA laws are a hindrance.
"ERISA presents challenges to meaningful state health reforms," Kofman said, "and also in financing certain health coverage programs."
Rep. Joe Wilson, R-S.C., listed the bargains he had recently found at retailers like Loew's and Wal-Mart, and said his constituents appreciate the Target store recently built in his district.
"We appreciate the retail industry," Wilson said. "We are wide open for business, wide open for jobs."
Rep. John Tierney, D-Mass., argued that healthcare is a right and argued for an expansion of Medicare to cover more Americans.
State laws requiring aspects of healthcare coverage are particularly important to women, said Rep. Betty McCollum, D-Minn., because they protect benefits like cervical cancer screening and mammograms. Before, when employees asked for "just basic healthcare coverage for women, we were told no."
She defended fair share proposals under consideration in the Minnesota state legislature as a way to reduce the strain of working individuals who are forced to turn to state programs for health insurance.
"We are just trying to get a handle on the cost," she said.
"I'm proud that labor is trying to help us on behalf of working families," she said, referring to the effort spearheaded by the AFL-CIO to enact such laws.
Rep. Carolyn McCarthy, D-N.Y., a registered nurse, said uninsurance is both unacceptable and costly, ad both sides of the aisle should work together to solve the healthcare crisis.
