Skip banner
HomeHow Do I?Site MapHelp
Return To Search FormFOCUS
Search Terms: contraceptive and coverage, House or Senate or Joint

Document ListExpanded ListKWICFULL format currently displayed

Previous Document Document 11 of 16. Next Document

More Like This
Copyright 1999 Federal Document Clearing House, Inc.  
Federal Document Clearing House Congressional Testimony

June 11, 1999


LENGTH: 2195 words


Statement of SAL RISALVATO OWNER RIVERDALE TEXACO RIVERDALE, NJ On behalf of the National Federation of Independent Business (NFIB) Subject:The Increasing Cost of Health Insurance for Small Businesses Before:House Education and the Workforce Committee Employer/Employee Relations Subcommittee Date:June 11, 1999 Good morning Mr. Chairman, and members of the committee. Thank you for inviting me here today, so I may explain to you the difficulty experienced by small business owners who want to provide health care benefits for their employees. I plan to give you my personal history in the health care marketplace. Also, I would like you to know that I have been involved in this issue since 1986, and have had many other small business owners share their experiences with me. The organization I have shared these experiences with is the one organization that truly has the best interests of small employers and the American public at heart. The NFIB has always fought to help small employers find ways to afford to provide health care coverage for their employees. This is an effort that continues today, and remains a top concern of those that own their own business and employ most of the workers in our country. I am sure that all members of this committee recognize that small business employs most of the workforce in the United States. There is not a lot of need to go through all of the statistics and fanfare about how small business is the engine that drives our economy. Congress has for years recognized the importance of small business to our economy. I only wish Congress would act as if small business is important, and not just say small business is important. If we solve the problem small business has of trying to pay for the health care benefits of their employees, we will solve much of the problem with uninsured Americans. Bigger business cannot be looked to as a means to solve this problem. Big business increases their profits by eliminating workers. Small business increases profits by expanding markets, and hiring workers. Yesterday, Proctor and Gamble announced the elimination of 15,000 jobs. Where will those 15,000 people find work? Most likely they will either find employment with a small firm that is growing and expanding, or will start their own enterprise. They will start out like most of us, as a one-man band, that grows, expands, and hires other workers that are discarded from big corporations. These one man bands and their few employees will need health benefits. Since they will be in a different situation and a different market than they were used to at Proctor and, Gamble, they will be faced with making the decision of whether or not to have health care coverage. We as a nation and you in Congress need to provide as many incentives as possible while removing roadblocks that get in the way of offering affordable coverage. I started in business when I was 18 years old. I started with a small landscape company, and after a few years moved on to the automotive business. I have owned a service station in New Jersey for 21 years, 2 months and 8 days. I have been a staunch supporter of the free enterprise system, and have never held a job for anyone else but myself. I have utilized all of the tools of the capitalist system available to me to compete for both customers and employees. One of the tools I have used since 1983 to compete for employees is to provide health care benefits. I have provided these benefits for my full time workers since then, and have even chosen to pay for them entirely. To this day I have never deducted a penny from an employee for health care benefits. I am very proud of that. Please understand, however, this has not been easy to accomplish. By 1986, sharp rises in cost made me reconsider the wisdom of my three- year-old decision. I had already begun questioning the wisdom after the first year of providing health care benefits when I learned from my accountant I was not permitted to deduct the portion of the premium that I had paid for my own coverage. Of course I did not learn-about this until-it Was time to file a tax return. I had never even considered a ridiculous tax policy like that could exist. Common sense told me it was an expense and that I should deduct it. Unfortunately, not all tax law requires common sense, I started to get angry and vocal about the sharp increase in premiums I had received. I was confused why something so important was not more competitive and affordable. I was receiving similar complaints from other small business owners. My industry still was not in tune to providing these benefits, which was the reason I started to provide them in the first place. I was providing something that my competition was not. Initially, providing this benefit was less expensive than providing a pay increase. In fact, businesses large and small utilized this tool as an added means of rewarding and compensating employees. This actually started the problem of rising costs, because Americans began receiving unlimited amounts of health care but were not directly paying for it. When more policies began giving benefits such as prescription coverage and eyeglass coverage under fee-for-service plans, premiums began to rise as there was no control on the final cost. The consumer, or in this case the patient, many times did not even know the cost of the final bill. Nor did they care to know. The patient paid their deductible, which was at that time usually very low and off they went. When one pays $250 for a service or product that could have a final price tag worth thousands of dollars, one may feel that one received one heck of a bargain. With the end user having little if any responsibility to control these costs, an upward and uncontrollable escalation of premiums resulted. Since insurance companies were obligated to pay the claims, provider fees escalated. The cost to provide medical services ballooned. As long as fees were billed at what was then known as "usual and customary" the insurance company was obligated to pay. Reflecting on this process, I believe the term "usual and customary" was nothing more than legalized price fixing. Without anything in place to make the market work in both the providing of health care, and the access to health care coverage, premiums continued to rise at a rate much higher than the rate of inflation. In many instances rate increases were 15% to 20% per year, every year. Of course, with premium increases like that employers reacted in many different ways. Many opted to drop coverage, while many opted to decrease coverage by increasing deductibles and eliminating services and procedures covered under the policy. Still, many opted to either start requiring employees to contribute all or a percentage of the premium, or increased the percentage the employee was already paying. This did, however, start to get the: attention of all Americans. When employees started paying the cost of health insurance and also higher deductibles, they began playing the role of an educated consumer, not just a patient. The debate began, with employees blaming employers, and- employers blaming insurance providers, and insurance providers blaming medical providers, and medical providers blaming lawyers, and everyone blaming the government. By the time 1991 rolled around I had considered dropping health benefits every year I had been, in business, simply because could not afford. coverage. In fact, on April 30 1992, 1 testified- before this committee when it was then under a different committee title and different leadership, and talked-about-the dilemma my colleagues and I were facing.- I asked this committee to consider reforms that would create incentives to, help drive down the cost of health care premiums. I asked for nothing more than reforms that follow the guidelines and principles that have made every other American product and- service the best on earth with the best and most competitive price. Those principles were market based and free enterprise based, and sought to remove the shackles of government. The day after I testified before this committee, I returned to my office only to find that while I was in Washington D.C. the mailman had delivered a notice from my health insurance carrier that my premium would be increased 30%. Oh how I wished that notice had arrived one day earlier. Even though the national debate had started, and was a focal point of political topics during the 1992 presidential election, small business was still faced with the high cost of providing health care coverage for their employees. The amount of Americans that are uninsured has risen from 30 million to 43 million. A large part of the cost increase has resulted from Americans with insurance coverage paying the health care cost of those Americans without health insurance. Since most uninsured Americans are employed by small business, it is imperative to find solutions that help small business provide coverage. Please take note that I said "help" and not "require". I will address that issue later. Not all the historical news regarding health care premiums is bad. Let's point out the good with the bad. After the nation had the heated debate in 1994, and breathed a collective sigh of relief when the Clinton Health Care Plan was defeated, the newly found consumer awareness pertaining to health care costs helped to slow the rise in medical inflation. In fact medical costs for the first time in over a decade grew at about 5%, much closer to the rate of inflation. My own personal experience was better than that. I received a premium decrease that equaled 15% (although still 15% above the 1991 level). I had modest if any increases for 1996 and 1997. But the premium monster is back. I have had increases of 20% each of the last two years. So now I am back to switching insurance companies, lowering coverage, and considering an employee contribution. Since only a few of the reforms the small business community has been asking for have been implemented, I am back before you asking you to please keep your eye on the again rising health care premiums, and to please make the reforms needed in: order to drive down cost. A frequently discussed issue that I am often asked about is the deductibility of health care premiums. Many small business owners are puzzled by the fact they cannot deduct 100% of the premium that they pay for themselves. Like I said earlier, I did not know of this unfair policy when I started to provide coverage. I honestly still do not know if I would have provided coverage if I had known in, advance and, in fact, probably would not have. , -1 often wonder, "how many employers are discouraged from providing benefits because of this unfair tax policy' Yes, I thank Congress -for changing the policy and phasing in a 100% deduction. No, I do not think it is fair to wait until 2003. Nor do I think it will be an incentive to small business owners to start providing coverage for their workers unless we phase it in now. - : By supporting Association Health Plans (AHPs), small business owners will have access to health care markets unavailable to them now. AHPs, will give small business owners the freedom to design more affordable benefit options, and offer workers more choices. Allowing small business to band together across state lines to purchase health insurance will allow them to enjoy the same economies of scale now realized by big business. Group purchasing is always better than individual purchasing. Congress can help keep premiums from rising by opposing any new mandates that would require employers to pay for coverage like substance abuse, contraceptive and reproductive procedures, and certain cosmetic procedures. Mandates of any kind only add to the cost of health care premiums. Certainly any mandates that require employers to provide coverage will be serious. By mandating coverage you take away the small business owner's freedom, you eliminate his choice. There are many times a small business owner is faced with making important decisions about which bill to pay first. If health care were mandatory, many small businesses would be faced with not being able to pay expenses that are critical to the overall operation, like rent, and utilities. If Congress were to support reform that encourages small business owners to provide coverage, the result would be more Americans receiving coverage. The more Americans covered, the lower, costs will go down. The more costs go down, the more small business will be able to afford to provide coverage. When more small businesses can afford to provide health care coverage, the more small business will have the necessary tools to attract and maintain quality workers. The spiral will finally turn in the opposite direction. Please help me to continue providing health care benefits for my employees, and please help my small business colleagues that do not currently provide coverage to be better able to do so. Thank you again, for allowing. me the opportunity to testify here today. I will be happy to answer any questions you may have.

LOAD-DATE: June 15, 1999

Previous Document Document 11 of 16. Next Document


Search Terms: contraceptive and coverage, House or Senate or Joint
To narrow your search, please enter a word or phrase:
About LEXIS-NEXIS® Congressional Universe Terms and Conditions Top of Page
Copyright © 2001, LEXIS-NEXIS®, a division of Reed Elsevier Inc. All Rights Reserved.