January 24, 2006

On January 12th, 2006 Maryland’s Legislature became the first in the nation to pass legislation requiring all companies with more than 10,000 employees to spend a certain amount on health care or pay the difference in taxes. It took an override of the Governor’s veto to get the measure passed. The law would require any employer with more than 10,000 employees to spend at least 8 percent of its payroll on employee health care. Today, similar legislation was filed in the Florida Legislature by Representative Susan Bucher (D-West Palm Beach).

Please take a moment to read the press release below outlining AIF’s strong stance against this kind of legislation.

Tallahassee – The Associated Industries of Florida (AIF) came out today in complete opposition to new legislation (HB 813 sponsored by Rep. Susan Bucher) which would impose a health tax in Florida of 7% to 9% to pay for health care coverage for employees. This would be the first time in Florida history that a payroll tax has been levied on employers and the first time that employers have been required to provide heath care to their employers. While the bill covers, at this point in time, only employers with 10,000 and more employees, history tells us the proponents are subtly trying to get their “foot in the door”. Labor unions will surely continue their efforts to decrease the employee requirement in the future so that the health mandate covers all employers.

Whether this proposed health tax affects one employee or ten-thousand, it would prove to be damaging to Florida’s business climate. AIF projects this could become one of the costliest taxes ever levied on Florida employers and one that would cause untold damage to the state’s efforts to recruit and retain high-paying jobs.

“This bill is a wolf in sheep’s clothing; it is nothing more than a new and costly tax on businesses. Florida’s economy is largely driven by smaller business and the service industry-where profit margins just aren’t large enough to pay for mandated health insurance. This type of “health tax” would put us at a competitive disadvantage. It could discourage new businesses from coming to Florida and may force some of our current businesses out. By leading a task force made up of business and economic experts we will work to develop a coherent strategy to defeat this outrageous and unfair proposal,” Barney Bishop, AIF President.

In Maryland, at the request of the ALF-CIO, legislators passed a bill in 2005 forcing large employers to insure more of their workers. The Governor vetoed that bill, but just last week lawmakers voted to override the veto. With the new law in effect, Maryland companies with more than 10,000 employees are mandated to spend at least 8% of their payrolls on employee health benefits.

The AFL-CIO is now focused on passing a similar law in other states including Florida, Connecticut, Kansas, Colorado and Tennessee. Labor unions are looking to require each state’s largest private employers to devote 8% to 11% of their payroll to health insurance or contribute a fee to a state fund.

Florida already has one of the largest numbers of insurance mandates in the country which increases the minimum cost of that health insurance policy to employers and employees,” said Stephen Joost, Partner/Chief Financial Officer for the Florida-based Firehouse Subs. If this proposal is passed, it will open Pandora’s Box. They’ll push every year to lower the minimum employee threshold of businesses that will be forced to provide costly health insurance coverage.”

During the 2005 Florida Legislative Session, an amendment was passed by the Senate during the final days that would have required employers with 10,000 or more employees to spend additional dollars on health care coverage. AIF worked diligently with lawmakers to have this highly controversial amendment reconsidered and ultimately defeated.

The model legislation now being distributed by labor unions suggests that employers of any size could be mandated to pay this health tax. According to the AFL-CIO’s background information…“Although large firms have historically provided nearly universal coverage, a study by the Commonwealth Fund reports that more than one-quarter of workers in companies with 500 or more workers do not receive employer-based coverage.”

In Maryland the legislation was aimed at companies who have 10,000 employees, but the same proposal being filed in Rhode Island takes aim at businesses with only 1,000 employees; where does it stop?

“Forcing employers to provide mandatory health coverage is a utopian solution, but not a practical one. In reality it sounds great, but for every benefit there is a cost and to say that businesses will pay for it is simplistic,” Bishop said. “Just this week, in remarks to the press, national AFL-CIO President John Sweeney loudly lamented the exportation of jobs overseas. This proposed idea would only exacerbate his concern. This payroll health tax will harm our state’s economic development efforts and our ability to attract high paying jobs to Florida. The trade-off will be Florida’s vibrant business environment.”