S.C. Senate Medical Affairs Affordable Care Act Subcommittee
Frank Knapp Jr.
President & CEO, South Carolina Small Business Chamber of Commerce
Senators, I want to report a hijacking.
Today we are told by Mr. Haislmaier (Heritage Foundation) that the issue of whether South Carolina should expand Medicaid as allowed under the Affordable Care Act is really about the state passing a bad welfare policy.
Director Tony Keck of our Department of Health and Human Services has framed the argument against expanding Medicaid as an inefficient way of improving the health of our citizens.
From the stand point of these opponents of Medicaid expansion, I don’t blame them for not addressing the real reason we are here today.
For well over a decade we in South Carolina and across this country have been talking about the need for healthcare reform.
In 2000 when I co-founded the South Carolina Small Business Chamber of Commerce we held meetings around the state to find out the major issues on the minds of small businesses.
One of the top priorities we found was the cost of health insurance.
Small businesses were begging for more affordable health insurance and health care. They weren’t talking about welfare or making South Carolinians healthier.
They wanted affordable health insurance or healthcare for themselves and their employees.
Addressing this problem became one of the key issues throughout the last decade. The Small Business Chamber offered several proposals for making health insurance and health care more affordable from legislation creating a state operated self-insured group for small businesses to partnering with the state’s community health centers to pair small businesses with those healthcare providers.
Then in 2006 the Small Business Chamber and several partners proposed that we increase our state’s cigarette tax to generate funds to subsidize small businesses providing health insurance to low income workers. For several years this Legislature debated this issue and finally increased the cigarette tax in 2010 but by then national health care reform was in place to address this issue.
And it is that national healthcare reform that brings us here today. On June 23, 2009, the very first meeting in the U.S. House was held to review a draft proposal for health care reform. Three House committees came together to form a House Tri-Committee on Health Care Reform.
The chairman was Representative George Miller and he opened that meeting saying “This hearing marks the next step in our critical and historical effort to guarantee all Americans access to quality affordable health care. No one can argue that our Nation’s current health care path is sustainable. Premiums and health care costs have skyrocketed for families and businesses alike.”
The result of this Congressional process was the passage of national health care reform entitled The Affordable Care Act. It wasn’t the Welfare Act of 2010 or the Improve the Health of our Citizens Act.
It was primarily about affordable health insurance and health care. It was the compromise solution to the demands of businesses to get health insurance and health care costs under control. And the law does.
The Affordable Care Act helps small businesses by mandating that at least 80% of our premium dollars go toward medical expenses or we get a refund. Last year that refund to South Carolina small businesses was $4.3 million. The Affordable Care Act creates health insurance exchanges that will act as a competitive marketplace for the employees of small businesses to get their insurance and receive premium assistance if the business does not offer a health plan. It has already provided for health insurance tax credits for small businesses with less than 25 workers to help with the cost of premiums. And it has done this while protecting 97% of our small businesses from any requirement to offer health insurance or pay a penalty.
So now we are facing one of the most important aspects of the Affordable Care Act that will help make health insurance more affordable for businesses and individuals—expanding Medicaid to those who have incomes up to 138% of the federal poverty level.
Many of our state’s low income workers are employed by our small businesses.
Here is how a Medicaid Expansion will help us.
First, there is a significant cost to a small business when workers are not on the job because they are sick or have to care for a family member who is ill. Even employees who don’t miss work when they are sick are less effective. Workers with health insurance for themselves and their families miss less work due to illness and are more productive. Clearly expanding Medicaid to cover low-income workers will economically benefit their small business employers.
Second, small businesses that want to offer health insurance to employees will find it more affordable under a Medicaid expansion. Small employers with Medicaid-eligible workers will have fewer employees to cover on a private group health plan and thus have less in premiums to pay. In addition, with Medicaid expansion the cost of the employee’s private insurance will drop due to a reduction in the “hidden tax” on every health insurance policy to pay for the uncompensated care for the uninsured. Based on projections by Milliman Inc., the actuarial firm used by Director Keck for his cost projections, the reduced premiums could be up to $1000 per year for family coverage.
The third benefit of a Medicaid expansion involves the requirement of the Affordable Care Act that businesses with 50 or more employees either offer health insurance or pay a penalty. Many larger small businesses in this category will decide to offer insurance but they won’t have any premiums to pay for their employees on Medicaid. I acknowledge that the shared responsibility part of the ACA does not address the following matter but I am sending a letter to the IRS during its comment period on this issue to ask that if a state expands Medicaid then employers with 50 or more workers that do not offer insurance should not have to pay any penalty for workers on Medicaid.
We are here today because of the Affordable Care Act and the importance of expanding Medicaid to achieving affordable health insurance and health care.
Those who want to distract you from this long-held business goal do so only to confuse the issue and try to appeal to those who don’t like welfare or who think there is a more efficient way to improve health.
Don’t let them hijack this debate.
We all want our citizens to be healthier. But we also know that without more affordable health insurance and healthcare for all our businesses and citizens, we won’t really achieve a healthier citizenry.
Now there are different ways of getting to more affordable health insurance and health care. “Plan B” being offered in the House is not one of them. Congress chose the Affordable Care Act and it is paying for the vast majority of the cost. That is the path we are on.
For many, many years small businesses have been calling for a solution to health insurance and healthcare costs. We ask the General Assembly to answer that call with full implementation of the Affordable Care Act including expanding Medicaid.