Lobbyists battle health-plan tax
Thursday, July 16, 2009

By Eileen Stilwell
Health insurance companies are lobbying furiously to block a proposed tax hike on non-HMO premiums that ultimately will increase consumer costs.

The state's $28.6 billion budget, which could be approved by the Legislature as early as today, includes an estimated $75 million to be raised from a tax increase on health and dental plans.

"Hardest hit would be smaller companies that can't afford to be self-insured, which covered only about 25 percent of the work force. For that reason, the increase is very poorly distributed hitting the employers who can afford it the least," said Wardell Sanders, president of the New Jersey Association of Health Plans which represents the insurance companies.

If adopted, the average annual group premium would rise about $40 a year to $4,040 per person.

"That doesn't seem like much, but we've reached a tipping point with insurance costs and more employers are going to say I just can't pay anymore."

Sanders joined about 50 members of the regional business community Wednesday for breakfast with Treasurer David Rousseau at The Mansion. The event was sponsored by the Chamber of Commerce of Southern New Jersey, which does not support the spending plan because of tax increases on income, health care, and the unemployment insurance trust fund.

Over the past two years, the small group health insurance market in New Jersey lost 70,000 members, according to the Department of Banking and Insurance.

Because of a quirk in the law, Mount Laurel-based AmeriHealth, which has 130,000 subscribers in New Jersey, could see its premium taxes increase from $426,000 to $7.4 million next year. Subscribers then could pay an extra $105 per year, under the proposed budget, said company spokesman Brian Litten.

New Jersey has the third highest individual income tax rate in the country, the 10th worst sales tax, 11th worst corporate tax and the No. 1 worst property tax. It also ranked dead last in the Small Business & Entrepreneurship Council's Business Tax Index for 2008, said Davis.

Treasurer Rousseau said he shared their pain.

"There are sacrifices everywhere in the budget. Although we were well prepared to weather an economic slowdown at this time last year, our conservative budget developed a $4.2 billion shortfall. We had to close that, then close an estimated shortfall for next year of $9 billion, a combined shortfall of more than $13 billion over two years," said Rousseau.

Henry Levari, business director for NJE3, a nonprofit organization that lobbies for school vouchers, said Corzine was too easy on extracting concessions from state employees.

Rousseau said Corzine was lucky to get anything given the fact that contracts were already in place.

Rousseau stressed the need for fiscal continuity in a recession that happens to fall in an election year. Plugging his boss's ability to ride out the storm, he said: