Opponent Testimony To HB 33
House Insurance Committee

Presented By
J Luke McCormick
Senior Vice President
The Frank Gates Companies
5000 Bradenton Ave.
Dublin, Ohio 43017
614.793.5487
jluke@frankgates.com

2 October 2001

Chairman Stapleton and members of the House Insurance Committee, thank you for the opportunity and privilege to testify today. I am Luke McCormick, Senior Vice-President and Corporate Secretary of The Frank Gates Companies.

We are a benefit and risk management company based in Dublin Ohio. Our company was first formed in 1946 with 3 people and has grown to almost 1500 people working throughout these United States. Our associates provide third party administration services in workers compensation, group health administration, auto and general liability claims as well as software development for the TPA industry and some insurance products.

My duties involve me with the development of our associates. In addition to my duties at Frank Gates, I serve as a business member of Governor Taft's Workforce Policy Board. I also serve on The Ohio Chamber of Commerce Health Care Executive Committee. I have been a member of that group since its inception more than 10 years ago.

I come before this committee representing the Chamber in opposition to HB 33. This bill would mandate that some Ohio employers, but not all, provide coverage for mental health and substance abuse treatment on par with other health care services and conditions.

The committee has heard much information regarding the increased costs that would arise if HB 33 were to become law in Ohio. Make no mistake about it; HB 33 will increase costs for some Ohio employers. It is estimated that for each 1% increase in health care costs, 7,000 Ohioans will lose their health care coverage for various reasons ranging from the employer no longer be able to afford this voluntary benefit, to the worker no longer being able to afford the shifted costs. I would like the committee to hear a different but I believe just as powerful, argument against this mandate bill.

I am not here to debate the motivating intent behind HB 33, for we respect Representative Olman’s honorable intentions. In fact, I told him that at a meeting with the executive group of the Ohio Chamber's Health Care Committee several years ago. We do take issue with the fact that government coercions is themechanism enforcing HB 33.

Several years ago a Letter to the Editor appeared in Nations Business from
______________a business owner in _________________. The letter stated that no matter the intent of the laws and regulations implemented by government, each law, rule or regulation takes freedoms away from someone or some group. In addition to the increased costs, that is what concerns the business community as much as anything.

You are aware that the Health Care Committee of the Ohio Chamber is against any health care mandate; you are probably tired of hearing that. What you may not know is the reason for our position. We are against mandates because they tear at the fabric of how business is conducted in this state. You know that we strongly support free and fair competition in our country. While we recognize that there must be a set of ground rules under which businesses operate, mandates clearly impede competition. This is because the costs of such government regulation have different impacts, depending on the size of the business and whether the company currently provides such coverage. The basic point is that these “ground rules" should not disrupt the basic market forces that ultimately should determine a competitive business.

This committee in previous testimony has heard that one of the competitive weapons in an employer's arsenal is supplemental employee benefits, specifically health care insurance. We believe that employers buy the best benefit packages they can afford for their workers. We also believe that they will try and fit that package to the needs and wants expressed by the majority of workers and, of course, within the company’s financial constraints. I know that is how my company shops for health care products for our associates.

The Workforce Policy Board of which I am a member is concerned with the future of Ohio's workforce. The vision that we aspire to is:

• "... an Ohio that is winning the skills race...
• Where employers are able to attract and retain skilled and productive workers.
• Where the State's education and training systems have the capacity to meet employers' needs for workers with higher-level skills.
• Where workers - young and old, emerging, transitional, displaced and incumbent - have access to a broad range of education and training services that give them the knowledge and skills needed to build a better life for themselves and their families, and enables them to take advantage of opportunities to secure stable, family-sustaining jobs."

Implied in the last statement about “family sustaining jobs” are jobs that provide health care coverage. In fact, this has been a subject of discussion for several of our committees. We know that if a job does not offer some health care coverage that is available and affordable, then medical treatment will push many people into financial difficulty. This will not help Ohio win the skills race nor attract and retain skilled and productive workers.

We must look at HB 33 in light of other "mandate" bills pending before the Ohio legislature. Taken by itself, HB 33 would not have a devastating effect on our economy. However, when looked at with all the other health care mandates employers must deal with, it could be “the straw that broke the camel's back.” I am told that there are at leost 32 mandated benefits that must be included in any insurance package employers must purchase as a voluntary benefit for their workers. In other words, this 33rd mandate could be the mandate that causes an employer to stop providing this voluntary benefit or causes a worker to complain he/she can no longer afford even a small portion of these costs.

We are quite concerned about the unintended consequences of HB 33 and would encourage this committee as well as the Ohio General Assembly to find ways to encourage insurance providers and employers to make this a competitive benefit and not a mandate. I agree with Sharon DiMario when she testified before the House Health and Family Services committee and explained that Ohio's employer coalitions are already partnering with other health care stakeholders to improve quality and increase accessibility and bring together payers, providers and insurers in a collective attempt to solve local health care marketplace issues.

Thank you for listening to our concerns and I would be happy to answer any questions the committee would pose.