Forced insurance could bankrupt small employers

By Richard Haugh

Requiring employers to offer health insurance to their employees could cost Colorado’s small businesses more than $3 billion over five years, according to the National Federation of Independent Business.

The Washington-based group’s research foundation released a study Feb. 3 also showing that forcing small employers — those with fewer than 500 employees — to offer health coverage would cost more than 29,000 Colorado employees their jobs. For all of the state’s employers, health care reform legislation with an employer mandate would mean a loss of 50,000 jobs and $5.9 billion in revenues between 2009 and 2013.

No legislation has been introduced this session that would lead to such an employer mandate. But Tony Gagliardi, NFIB’s Colorado state director, said that — based on conversations he’s had with lawmakers — he expects reform legislation to be introduced by Democrats this year.

“We take these conversations very seriously. While it’s not on the docket yet, we expect to see it,” he said. “That could have a serious impact on Colorado, and whether we would ever be able to attract new business here would be doubtful.”

Ironically, while such mandates would be costly to many businesses, some would prosper — particularly in the health-care industry. That’s because more money would be spent to cover the additional employees who would pick up health insurance, said William Dennis, NFIB senior research fellow.

While health care reform is high on state and federal agendas, Dennis said the wishes of both legislators and employers need to be weighed.

“The clear issue for small business people is cost. The politicians are interested in coverage,” he said. “The two are highly interrelated.”

Gagliardi said certain market reforms short of an employer mandate could be made to reduce costs. He noted proposals that have been bandied about to allow businesses to join purchasing pools to negotiate premiums, and called on Colorado’s General Assembly to consider allowing businesses to purchase insurance policies from companies located outside the state.

A bill addressing that issue has been introduced by, Cindy Acree, R-Aurora, a member of the House Health and Human Services Committee. HB 09-1256 would allow the state insurance commissioner to enter multistate agreements to permit consumers to buy out-of-state health insurance products.