A number of Vermont business leaders say the Shumlin Administration is trying to punish thousands of small businesses when a new health care Exchange goes into place next January. The groups span the political spectrum from the Vermont Chamber of Commerce to Vermont Businesses for Social Responsibility.
When the Legislature created the Catamount Health Care program in 2006, it also passed a companion bill that imposed an assessment on small businesses that don’t offer health care coverage to their employees.
Currently about 50 percent of all businesses with fewer than 50 employees don’t provide insurance and they pay an annual assessment of $476 for each of their workers. These assessments raise roughly $10 million a year and the money is used to help finance Catamount – a program that will be phased out at the end of December.
Here’s the problem that the business groups have with the Governor. He’s encouraging many small businesses to drop their coverage in January to allow their employees to buy insurance through the Exchange where federal subsidies are available. But, at the same time, he wants to keep the penalty in place for businesses that don’t offer coverage.
Dan Barlow is the public policy director for Vermont Businesses for Social Responsibility. He says the Governor’s approach is unfair.
"So we shouldn’t be punishing businesses for doing exactly what the government is telling them to do."
Betsy Bishop is the president of the Vermont Chamber of Commerce. She says the Governor’s plan sends a mixed message to the state’s small business community.
"We are continuing to put an assessment on small employers who are doing what the health care reform laws are encouraging which is to drop coverage for their employees."
Barre City Rep. Paul Poirier has introduced a bill that repeals the assessments beginning in January because he says the Governor’s approach makes no sense.
"So by doing what the government is asking you to do you will pay a penalty for each employee. That is wrong."
Robin Lunge is the director of Health Care Reform for the Shumlin Administration. She says the money is needed to help provide subsidies for low income working Vermonters when they enter the Exchange in 2014.
"We have not proposed to eliminate that assessment because the purposes for which it was passed remain."
And Lunge says small businesses that follow the Governor’s advice and drop their coverage will still benefit financially
"I think what employers will find is that even with the assessment the cost of health care is ten times the assessments," said Lunge. "So they will still be seeing a financial benefit in some circumstances for both themselves and their employees. So we think it’s still a win win."
The House Health Care committee will be taking a close look at this issue in the coming weeks.