Health Care Hurts Bottom Line

Health care costs were well covered by the media in 2005. Rising prices affected most industries, HVAC included. With a watchful eye on the bottom line of business, many companies found themselves scaling down benefits to survive, and in some cases, cutting benefits completely.

Keeping a solid workforce and attracting new workers to the HVAC industry was in question as rising premiums and slowed legislation marred the advantages of working in the field. "In a competitive market for outstanding performers, we have to offer health insurance, so we will have to find a way to absorb the costs, regardless," said Ruzwa Cooper of Buzz Oates Air Conditioning Inc., Sacramento, Calif.

The Air Conditioning Contractors of America (ACCA), the Associated Builders and Contractors (ABC), and other national HVACR trade associations supported new legislation designed to ease the financial pressure of providing benefits.

An ACCA 2004 report brought to light that 90 percent of contractors had experienced a premium increase, and 50 percent of those increases averaged approximately 47 percent.

The Small Business Health Fairness Act of 2005 was introduced and sponsored by Reps. Sam Johnson, R-Texas; John Boehner, R-Ohio; Nydia Velazquez, D-N.Y.; and Albert Wynn, D-Md. in early Feb. 2005. It was designed to allow small businesses to join together nationwide through federally certified association health plans (AHPs) and purchase group insurance policies.

"The key to expanding access to affordable health care is more market competition and allowing small businesses to pool together across state lines, thus increasing their purchase power," said Paul Stalknecht, ACCA president and CEO. "Fortune 500 companies and large labor unions are already allowed to do this. Shouldn't America's small businesses have the same option?"

July 26, the bill passed the House of Representatives with approximately 64 percent of the 426 members voting in favor. "I applaud the House of Representatives for passing the Small Business Health Fairness Act, which will increase the availability of association health plans," said President Bush. "This change is overdue, and I urge the Senate to follow the House's lead and pass this good legislation this year."

This year also saw the resurfacing of the term cafeteria health insurance. Known as defined contribution plans, this type of insurance has been around for about 20 years. Under this type of next generation plan, employers offer multiple benefit options. They then agree to pay a set amount of the employee's overall benefits. The employee is free to choose what plan is needed or desired, but the employee pays the financial difference of how much the plan costs as compared to how much the employer covers.

This, according to the health insurance industry, is intended to foster cost-responsible consumerism in the employee. "We are all much more cautious and prudent about our buying habits when it is our money, rather than the company's," said Cooper. "I would like to see further development of the consumer-driven health care trend so that individuals are more aware and more sensitive to what they are buying and why."

Publication date: 12/26/2005

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