MANDATED HEALTH COVERAGE: Why You Can’t Have Your Cake and Eat It Too!

March 22, 2006

Once again, liberal, left-wing advocates in the labor movement and their front organizations have proposed legislation that would mandate health insurance for all large companies in Florida paid for by the employer. Since it seems that we are in fantasy land, why don’t we just mandate that all employees will have a minimum of four weeks paid vacation leave every year, and that employees will be able to set their own work hours without notifying their bosses. And when the legislature rejects this absurd idea, we’ll just raise some money and duke it out by trying to cement it into the state Constitution!

Well, the Florida AFL-CIO and their Democratic legislative allies – Rep. Susan Bucher and Sen. Skip Campbell – have submitted proposed legislation to the House of Representatives and the Senate respectively to mandate that all employers of a certain size (which size can be easily manipulated by insertion of a simple amendment to the bill) must spend at least 9% of their gross revenues on buying health insurance for their employees, and if they don’t spend at least this arbitrary and capricious amount, then the difference between what the company spends and the mandated amount must be paid by the company annually to the state to help fund Medicaid. When I heard this dangerous proposal, I thought Karl Marx had risen from the dead and had assumed the bodies of these two extremist legislators. Fortunately, Marx is indeed still dead, and so is this proposal before the Florida legislature.

While that doesn’t mean that this proposal is finished, it simply means it is going to be fought on a different battlefield. But, I’m getting ahead of myself.

This mandated health care tax is a bad idea that unfortunately was passed last year by the Democratic House and Senate in Maryland. It was promptly vetoed by the Republican Governor, and then subsequently over-ridden by the legislature to become the law of the state. Now, labor leaders and their cohorts are trying to pass it off in Florida as well. Proponents claim that large companies are evading their social responsibility by not providing health insurance for their employees and thus are exacerbating the cost of health care for poor citizens in their state. To punish them, labor wants to force companies to pay a penalty to the state to cover the cost of the state’s share of Medicaid.

While this proposal sounds good on the surface, what the proponents don’t tell you, is that if you force company’s to provide health insurance, that those company’s won’t be able to continue to employ some or all of their employees. National statistics document that about 98% of all large company’s in this country already provide some type of health insurance coverage. The problem is really with medium and small company’s, they are the ones who are caught in the middle – they have a difficult time finding affordable insurance for their employees because they are not large enough to be able to spread the risk – and that’s the situation in Florida, we have a lot of medium and small company’s.

Florida’s business environment is essentially a three-legged stool: tourism, agriculture and the service industry. And to complicate matters, we are a right-to-work state, which simply means that you don’t have to belong to a union in order to get a job like you have to in the Rust Belt states. So, what this is really about is a tool by the unions to try and kick-start their declining membership rolls by promising populist idea’s, but more on that later.

If you think about it, most employers want to treat their employees fairly and they’d like to keep them as employees because the alternative is turnover which is expensive, counter-productive and hurts profits. The proponents would have you believe that by simply mandating health insurance that company’s will provide the insurance and gladly pay the difference to the state to fund insurance for the poor. This of course is simply ridiculous. A capitalist society in a free-market system just doesn’t operate in that fashion, or at least not for very long.

Just a few weeks ago, John Sweeny, the AFL-CIO President in Washington, DC, gave a speech at the National Press Club lamenting the loss of U.S. jobs to off-shore company’s and foreign countries. While out of one side of his mouth he was talking about protecting and securing jobs for Americans in America, out of the other side of his mouth he is scaring every employer in this country by calling for mandatory health insurance to be paid for by employers. So, which way does he want it, because he can’t have it both ways. The reality is that in the 21st Century, work can be sent to an employee, rather than an employee being sent to work, which means that as unions further increase the cost of doing business in this country through higher wages and bigger benefits, the more likely it is that those jobs are going to be outsourced to places that can better compete in a globalized economy. And so we wonder why American car company’s are facing economic difficulties and yet the facts are that American auto workers are some the best paid workers in the world, as are their retired employees, yet the car manufacturers are finding it increasingly more difficult to compete with manufacturers from other countries and their lower operating costs. So, while we are becoming more uncompetitive, why don’t we just add more costs, like health care, to the cost of doing business?

As I mentioned earlier, this concept is D.O.A. in the Florida House and Senate because it could be the death knell for our vibrant economy here in the Sunshine State. Rest assured though, that as Sen. Skip Campbell campaigns for Attorney General he is going to try and incite the masses with this ideal. When he loses, labor organizations will simply work to put it on the 2008 ballot as a proposed Constitutional amendment. This is why the business community in Florida is working to change the process by which we amend our Constitution. Or as Sen. Jim King, a former Senate President put it so aptly, Florida is in danger of being “Californacated,” that is going the way of California and their endless propositions that promise more services by paying less taxes! It’s why California’s economy is suffering and their state budget is in deep trouble because Californians have been sold a bill of goods – that you can have your cake and eat it too. California in the 1990’s was a trendsetter, but luckily Florida has not yet adopted this onerous trend.

For the union movement in Florida, this could be their swan song. The Florida AFL-CIO is increasingly becoming marginalized. With fewer members paying dues and saddled with 20th Century idea’s, they find themselves at the margins attempting to do whatever they can to rally their membership to the concept that corporate Florida is the enemy and that only they have the solution to solve every social ill that confronts our society. Today, it’s the proposal that every company with at least 10,000 employees must provide health insurance or pay the piper, tomorrow it’s every company with at least 1,000 employees or perhaps 500 employees or whatever number that suits them until they’ve mandated it for everyone. In a utopian society that is to be expected, but for a capitalist society in a globalized economy, it’s just pie in the sky.

For AIF, this is a fundamental attack on our private enterprise system – one that we are committed to defending. Therefore, we will work tirelessly to resist the easy temptation of this bad idea, and then we will work to defeat wherever it raise its ugly head. In the meantime, the business community will continue to look at every conceivable idea that will help to keep health care costs in check and encourage, or incentivize if necessary, the ability of company’s to provide for the health of their employees. While we continue to fight well-meaning mandates which increase the minimum cost of health insurance, we will continue to look for innovative idea’s such as Health Savings Accounts (HSA’s) or HealthCHECK, the website that encourages consumers to shop hospitals for their elective surgery based on cost and efficacious outcomes.

The truth be known, no state in America has successfully solved the health care crisis. Why? Because it isn’t just a state issue…it’s going to require a federal solution in part or whole as well. The cost driver for health care is that the medical technology that extends lives that were previously lost, is very expensive indeed. And so long as we continue to save people in expensive, new, evolving technology, the cost of health care is going to continue to skyrocket. But the alternative is not an easy one to contemplate either. So, we will continue to seek answers and search for new idea’s, but the reality is that Florida isn’t going to solve the national health care crisis unilaterally.

In the meantime, we will not succumb to populist ideals with expensive price tags without a fight and we believe that Floridians ultimately will see the fallacy of this bad proposal.

516 North Adams Street ● Post Office Box 784 ● Tallahassee, Florida 32302-0784 ● Phone: (850) 224-7173 ● Fax: (850) 224-6532 ● www.aif.com