Company News
Employer Mandate on Health Care Largely Symbolic
October 5th, 2009
SALT LAKE CITY, UT - A signature health care reform bill passed by state lawmakers this year was supposed to boost the number of Utahns who have insurance, among other goals.
In reality, HB331, which requires certain state contractors to provide health insurance to their employees, is largely symbolic and will likely have little impact, an analysis by The Salt Lake Tribune has found.
That's because most of the companies that win the contracts targeted by the law already provided insurance, many businesses said in a Tribune survey.
The law says companies working on design and construction jobs worth $1.5 million or more -- and $750,000 or more for subcontractors -- must provide employees and their dependents a minimum level of insurance. The law took effect in July.
With unprecedented prodding by then-Gov. Jon Huntsman Jr., lawmakers also approved bills meant to eventually expand access to insurance and reduce costs. Lawmakers lauded the contract law as a "big step forward."
One goal: to reduce the number of uninsured Utahns, now at 13 percent. It was also meant to reduce the ranks of uninsured workers who can't pay for care they receive, and to level the playing field for contractors, according to the bill's sponsor, Rep. Jim Dunnigan, R-Taylorsville.
Before the law, companies that didn't provide health insurance could underbid their competitors, he noted.
The law sets the policy that "as a state, we're going to support and encourage responsible employers who provide health insurance for their employees," Dunnigan told lawmakers during the session.
Requiring insurance could also lower the amount of care provided through charity and state programs like Medicaid and the Children's Health Insurance Program, he noted. Insured Utahns could benefit, too: An estimated 9 percent to 17 percent of health insurance premiums pay for the cost of caring for the uninsured, he noted.
Advocates for reform doubted HB331 could make good on such promises, and they appear to have been right.
Through records requests, the Tribune determined there were 95 contractors who had received $1.5 million contracts in 2007 or 2008. Half of them, a mix of 46 small and large employers, participated in a telephone survey.
About 94 percent said they provided insurance in the past. The same number offer insurance today.
In other words, the law has not yet prodded any of them to offer insurance, though it did create some angst as contractors assessed whether their plans met the law.
"That's right on," said Rich Thorn, president and chief executive of the trade group Associated General Contractors, when asked if the law was largely symbolic. His group nevertheless opposed the mandate, calling it "social engineering" and unfair to construction contractors.
If lawmakers wanted to get more Utahns insured, "they could require anybody that has a business or has a business license to provide health care coverage. That would never see the light of day," he said, calling contractors "low-hanging fruit."
Indeed, state lawmakers have refused to discuss a large-scale mandate to provide more Utahns insurance, as is being discussed now at the federal level.
Thorn knows of some contractors, which he declined to name, who have decided to stop bidding on state projects rather than provide insurance, because the cost is too high. "It does cost more money to work for the state of Utah today than it did a year ago," he said.
Staker Parson Cos., one of the companies with the most contracts worth more than $1 million, already provides insurance to its construction crews. Paul Glauser, a vice president over benefits for the Ogden company, said he was glad the law leveled the playing field, but he too has problems with it. It adds administrative costs and forced the company to insure more employees than it had before, he said.
"We feel like we are one of the companies that is doing everything right, however, we still end up paying the cost for those who are not," he wrote in an e-mail.
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