The Governor's Healthcare Bill - Too Big and Too Expensive

When it comes to passing legislation in the Illinois General Assembly, the process can be summed up in pretty simple terms—you have the votes or you don’t. If you don’t have the votes to pass the bill, you figure out a way to compromise and get the support you need. If you’re still short on votes, you let the issue lie and come back and fight another day. Unfortunately, this isn’t the philosophy Governor Blagojevich is following with his universal healthcare proposal.

The governor’s frequently-mentioned, often-debated healthcare proposal would cost billions of dollars the state just does not have. Yet he continues to press for the plan even though he can’t secure the support from the legislature, particularly those in his own party.

Initially, the governor proposed to fund the universal health plan through a gross receipts tax (GRT) which would soak the business community for more than $7 billion. The GRT was so fatally flawed it went down 107-0 in the House of Representatives.

The governor then offered up a scaled-back healthcare plan and the idea to use the revenue generated from a three percent payroll tax to fund it. The problem is that many lawmakers saw through the “scale-back” and realized it was more of a “phase-in.” Passing legislation promising healthcare benefits to thousands of citizens, only to have the money run short is not a situation lawmakers were ready to embrace. Many expressed concern that the plan is too big and costly for a state already experiencing difficulties paying for current obligations.

The lynchpin for the governor’s plan is a three-percent payroll tax on employers with more than 10 employees who do not offer health insurance or don’t pay enough for health insurance for their employees (at least four percent of their payroll). Those employers would either pay the tax or could opt in to an insurance product devised by the state, but offered through an insurance company. The rates for this product would be controlled by thestate and subsidized by the employer tax.

A typical small business has fewer than 10 employees and gross sales of about $350,000 a year. This proposal will discourage small business creation, limit future investment and jeopardize the jobs our small businesses provide every day and are essential to our economic stability.

In a recent survey of National Federation of Independent Business members, 70 percent opposed any statewide health insurance reform proposal which relies on an assessment on payroll for funding. According to another survey, when NFIB members were asked if the government should assess a payroll tax or other sanctions on businesses which do not provide health insurance for their employees, 86 percent said No.

Small business owners want a cure for their healthcare problems. They don’t, however, want more rate controls, taxes and government intrusion. NFIB members favor a private-sector solution which allows the free market system to work. Artificially setting low prices for a healthcare product means one thing—someone else is paying more.

Those employers who don’t qualify for the governor’s plan and buy their insurance product on the open market would likely be the ones subsidizing the rate-controlled product. We know the insurance industry will find a way to make a profit. If the government forces them to offer a below-cost product, they will make up for it in other lines of insurance.

Unfortunately, the governor continues to pursue his universal healthcare plan and has threatened to find an alternate route to get what he wants. By using the rule-making process and executive orders, the governor plans to implement the majority of his universal healthcare plan without legislative approval. Most believe this approach is constitutionally shaky, not to mention a complete disregard for the three branches of government. TPW