WASHINGTON-With the passage of federal health care legislation in doubt for this session of Congress, tire dealers and other business owners must look to state regulations for their health care rights and responsibilities. For dealers whose businesses cross state lines, knowing the distinctions between state health care laws can be crucial. A dealer with stores in Oregon or Washington, for example, faces the phase-in of some of the most sweeping employer mandates for health insurance in the U.S. His dealerships and employees in neighboring Idaho, however, are covered by no such laws.
Passage of federal health care legislation would not necessarily mean the end of state regulations. For example, the health care bill sponsored by Sen. George Mitchell, D-Maine, calls for federal employer mandates-but only for those states that don't reach the goal of covering 95 percent of their residents by 2002.
The bill sponsored by Rep. Richard A. Gephardt, D-Mo., contains no such exceptions, but the Mitchell bill is a more likely basis for whatever health care legislation Congress may eventually approve.
Other points of health care law, such as employer exemptions under the Employee Retirement Income Security Act, are still under debate in the House and Senate. Among other things, ERISA grants multistate corporations an exemption from obeying individual state pension and insurance laws whose requirements are over and above those mandated by the federal government.
Meanwhile, tire dealers find that the health care regulations in different states can vary as much as the climate or the terrain.
Hawaii, the first state to attempt universal coverage, requires all employers to provide health insurance to all full-time employees through either indemnity plans or health maintenance organizations.
Minnesota also has a universal coverage law, but no employer mandate. Tennessee has established TennCare, a statewide managed care program for low-income residents, also paid for by the state instead of business.
Maryland's health care law, with its strong cost-containment measures for the benefit of small business, went into effect July 1. Vermont passed a universal coverage law in 1992, but efforts to enact it fell apart earlier this year when the legislature could not decide on how it would be funded.
An examination of the health care laws and regulations in these five states shows how they can affect independent tire dealers.
Hawaii's health care laws, on the books since 1974, were intended to ease the worries of Hawaiian workers over the cost of health care. But they have added immeasurably to the health care cost worries of Hawaiian employers, according to tire dealers there.
``When you look at any ratings of business climates in the 50 states, Hawaii is ranked dead last,'' said John Mayo of Lex Brodie's Tire Co. in Honolulu. The overriding reason for that, he added, is health care.
``We have over 100 employees, so we're big enough that we wield some prestige in the marketplace,'' Mr. Mayo said. ``But some of the smaller operations could face bankruptcy.''
As an example, Mr. Mayo cited a small dealer in Hawaii who hired a new employee. Unbeknown to the dealer, the new worker had cancer, and the dealer's insurance premiums soon increased sixfold, from $2,000 to $12,000 per month.
In the current health care debate, President Clinton has often pointed to Hawaii's plan as exemplary and a great success.
For Mr. Mayo, however, it has engendered nothing but distrust of government solutions. ``All things being equal, I've never seen the government do anything as well as private industry,'' he said.
The state legislature passed MinnesotaCare two years ago, and since then the plan has gained a reputation as a model for a universal coverage program with no employer mandates.
A leader in both managed care and managed competition, Minnesota began a number of health care programs many states have since imitated. Among the features of MinnesotaCare are a state-sponsored insurance purchasing pool for small businesses; publicly subsidized coverage for unemployed and low-income Minnesotans; and various programs for managing health care costs.
Because Minnesota employers aren't forced to pay for universal coverage, they don't have many complaints against Minnesota-Care. ``I've talked to several dealers about the plan, and they don't seem to be too upset about it,'' said Vic Leerhoff, executive director of the North Central Tire Dealers & Suppliers Association. ``So far it's working OK, although some dealers have cut down on part-time workers.''
For insurers, however, it's a different story. The North Central TDSA recommends health insurance policies written by Federated Insurance Co., and according to Federated officials, Minnesota insurers are getting nervous about where MinnesotaCare may lead.
``MinnesotaCare offers universal coverage, but no provision for funding and no mandate that employers must provide it,'' said John Kennedy, marketing manager of group insurance for Federated. Some sources estimate that MinnesotaCare could be $600 million in debt in a few years, although a pending 2 percent tax on doctors and hospitals could redress some of that balance.
Health care providers must also contend with the cost-containment law the legislature passed last year, making them choose between contracting with ``integrated service networks'' (ISNs) or being reimbursed in a rate-regulated, all-payer program.
Although the ISN arrangement is preferable for doctors, hospitals and insurers, the law states that only non-profit health care providers may participate in it. ``Minnesota is sending a message that for-profit operations are not welcome,'' Mr. Kennedy said.
Two major insurers, Prudential and Travelers, already have stopped offering health insurance in Minnesota, Mr. Kennedy said. ``We may have to completely change how we provide health care to tire dealers in the future, or just not provide it at all.''
TennCare, the state's alternative to Medicaid, went into effect this past January. By April, more than 900,000 Tennesseans were enrolled in the plan.
Under TennCare, the Medicaid acute care program was eliminated, and Medicaid recipients and the uninsured were enrolled in managed care networks. Families with incomes below the federal poverty line-$11,890 annually for a family of three-pay nothing for coverage; others pay premiums on a sliding scale, with those at 400 percent or higher of the federal poverty level paying the full amount.
The program is unpopular with some Tennesseans, particularly physicians, who say their rate of reimbursement is 30 to 60 percent less than under Medicaid.
Business owners, however, show little concern over the program; they do not have to provide any coverage under the program, although they have the option of paying their employees' TennCare premiums.
``TennCare hasn't affected us at all,'' said E.E. ``Doc'' Holliday of Winchester Tire & Alignment in Memphis. ``It's not like a mandatory coverage plan-it's more of an effect on Medicaid than an employer cost.''
Besides TennCare, Tennessee has guaranteed issue and renewal of health insurance coverage, as well as other reforms to ease the efforts of small businesses to buy insurance. But Mr. Holliday, a member of the board of directors of the National Tire Dealers & Retreaders Association, said these reforms haven't reduced costs.
``We pay for all our employees' premiums, although they pay for dependent coverage themselves if they want it,'' he said. ``But that doesn't affect the cost of health care, except that we have a bigger (purchasing) group, since every-one's in it now.''
In the past 10 years, to contain costs, Winchester Tire has raised the deductible on employee health insurance from $100 to $350.
A group of sweeping health care reforms went into effect in Maryland July 1, with the goal of making health care affordable for Marylanders in general and small businesses in particular.
The new laws authorize community ratings for small health insurance purchasing groups, meaning insurers must charge the same rates to similar groups, regardless of differences in medical histories.
``Under the Maryland system, everyone's the same,'' said Roy E. Littlefield III, government relations director for the American Retreaders' Association and the Service Station Dealers of America and Allied Trades. ``Overall, our industry will see substantial reductions in health care costs.
``If you own a small business with four employees, all under 25, your rates will probably go up under the Maryland plan,'' Mr. Littlefield said. ``But if you're a small-business owner and you're 58, your chief mechanic is 47 and your shop foreman is 55, your rates will come down a lot.''
Under the Maryland law, a task force will establish a basic health plan that all insurers must offer. Insurers also must file rates with the state insurance commission. They can change the rates every three months, but once they sell a policy to a customer, the premium must remain constant for a year.
Measures in the new law set a framework for limiting physicians' fees and insurance profits; other provisions authorize development of a medical care data base and an electronic claims clearinghouse.
It is too soon to evaluate the Maryland system. ``We've felt absolutely no repercussions from this whatsoever,'' said Mike Kress of Marlboro Tire, Upper Marlboro, Md. ``It probably will take a while for the effects to be felt.''
But Mr. Littlefield, who lobbied intensively for the new law, estimates most Maryland tire dealers and auto repairers will see a 40 percent reduction in their insurance rates. ``It's probably the best proposal you can get to bring people into the system without forcing them into it,'' he said.
Vermont passed a universal coverage law in 1992, creating a commission to design two models for universal health care coverage by November of the following year.
That plan, however, ended in disarray this year, when the state legislature could not decide on establishing a single-payer or regulated all-payer health care system.
The Vermont House of Representatives, unable to decide whether to pay for universal coverage through premiums or taxes, passed a bill in March with no funding mechanism. And in early May, a Senate committee killed a modified version of Gov. Howard Dean's employer mandate plan.
All this was good news to Terry Sheahan of Goss Tire Co. in Burlington, Vt. Mr. Sheahan, a director of the New England Association of Independent Tire Dealers, feels strongly that tire dealers are in no position to pay for any of the health care plans the Vermont legislature proposed.
``My concern is that small business just can't stand too many more mandates, particularly since we and a lot of other tire dealers offer what we consider excellent health care packages to our employees,'' he said.
``There have been many different health care proposals in Vermont, but the ultimate goal of all of them is universal coverage,'' Mr. Sheahan added. ``The question is: Who's going to pay for it? Business is saying, `We don't want to,' and rightfully so.''