RD6 - 2008 Annual Executive Summary of the Small Business Commission


    Executive Summary:
    Introduction.

    The Small Business Commission was established to study, report and make recommendations on issues of concern to small businesses in the Commonwealth. The powers and duties of the Commission include:

    * Evaluating the impact of existing statutes and proposed legislation on small businesses;

    * Assessing the Commonwealth's small business assistance programs and examining ways to enhance their effectiveness; and

    * Providing small business owners and advocates with a forum to address their concerns.

    The co-chairs of the Commission are Senator W. Roscoe Reynolds and Delegate Jeffrey M. Frederick. The other legislative members of the Commission are Delegate R. Lee Ware, Jr., Delegate G. Glenn Oder, Delegate William R. Janis, Delegate Clarence E. Phillips, Delegate Algie T. Howell, Jr., Senator Frank M. Ruff, Jr., Senator R. Creigh Deeds, and Senator George L. Barker. The gubernatorial appointees are Robert A. Archer, Lana Ingram Digges, Marilyn H. West, and Carlos Del Toro.

    2008-2009 Interim Activities.

    The Small Business Commission held four meetings, including one working session, during the 2008-2009 interim.

    Tuesday, August 12, 2008.

    The Small Business Commission met in Richmond, Virginia, on August 12, 2008. Delegate Jeffrey M. Frederick and Senator W. Roscoe Reynolds were elected co-chairs.

    The Commission took up House Bill 352 (Cole) which was passed by in the House Committee on Transportation during the 2008 Session of the General Assembly and was forwarded by letter to the Commission for further study. The bill would permit the operators of certain intrastate buses that provide sightseeing and transportation services for tourists to maintain lower liability insurance on such buses. A representative of the Department of Motor Vehicles noted that the current liability insurance amounts for intrastate motor carriers match the federal law for interstate carriers. The Commission expressed concerns regarding the potential broad application of the bill. The Commission also discussed other ways to limit the scope of the bill, including imposing speed limitations and geographic limitations on the operation of such buses and requiring the disclosure of the liability insurance limitations to the passengers. The Commission asked Delegate Cole to meet with the relevant stakeholders and prepare a new proposal to be revisited at a future meeting.

    The Commission then discussed the issue of the cost and availability of health insurance for small businesses. The Commission heard from Holly Wade, a policy analyst for the National Federation of Independent Business (NFIB), who provided an overview of the concerns of small businesses regarding the cost of health insurance. She noted that the number one issue for small businesses is health insurance. The Commission also reviewed several bills that had been introduced during the 2008 Session of the General Assembly but did not pass including:

    * House Bill 807 (Englin) and House Bill 1497 (Marshall, D.W.), which would create a Small Business Health Insurance Pool Advisor, in the Office of the Secretary of Health and Human Resources.

    * House Bill 59 (Frederick), which would offer a tax credit--capped at $500 per employee per year--for health insurance premiums paid by small businesses for their employees.

    * House Bill 1191 (Moran), which would offer a tax credit--capped at 20% of amount paid per employee--for long-term care insurance premiums paid by small businesses for their employees.

    The members of the Commission then engaged in a general discussion about the focus of the Commission. It was suggested that the Commission should attempt to monitor new bills and regulations that affect small businesses. The Commission decided to focus its future meetings on the issue of the cost and availability of health insurance for small businesses.

    September 9, 2008.

    The Commission met in Richmond, Virginia, on September 9, 2008 for a working session, the topic of which was the cost and availability of health insurance for small businesses. The Commission invited representatives from other Virginia governmental entities and private organizations interested in this area to participate in the work session. The invited participants were:

    * Robert Nealon, chairman, Virginia Small Business Advisory Board
    * Anne Colley, Bureau of Insurance, Virginia State Corporation Commission which provides staff for the Virginia Special Advisory Commission on Mandated Health Insurance Benefits
    * Elizabeth Moran, Director of Legislative and Community Affairs, Virginia Department of Business Assistance
    * Hal Greer, Joint Legislative Audit and Review Commission
    * Julia Ciarlo Hammond, State Director, NFIB
    * Tyler Craddock, Virginia Chamber of Commerce (VCC)
    * Doug Gray, Executive Director, Virginia Association of Health Plans

    Also participating in the work session were Stephen Bowman from the Virginia Joint Commission on Health Care (JCHC) and Mark Pratt of Anthem Blue Cross and Blue Shield.

    The members of the Commission and the participants in the work session focused on the increasing number of small businesses that are either not offering health insurance to their employees or dropping the coverage they currently provide. The Commission discussed several specific options to address this issue including:

    * Allowing small businesses to participate in the Virginia state employee health plan.

    * Encouraging the use of health savings accounts where the employee is able to save money, tax-free, for current or future health care needs.

    * Encouraging the use of 125 plans which allow employees to purchase health insurance using pre-tax dollars.

    * Allowing the sale of limited benefit health insurance plans that exclude some or all of the health insurance mandates currently required by the Virginia Code.

    * Providing tax credits or subsidies to small employers as an incentive for them to offer their employees health insurance.

    * Establishing a pilot program similar to the VirginiaShare Health Insurance Program proposed during the 2008 Session of the General Assembly.

    October 21, 2008.

    The Commission met in Richmond, Virginia, on October 21, 2008 and heard the following three presentations:

    * The Virginia Share Health Insurance Program--The Honorable Marilyn B. Tavenner, Secretary of Health and Human Resources described the program, which would subsidize the purchase of health insurance under a three-share financing approach in which the employer, the employee, and the Commonwealth would pay one-third of the monthly insurance premium for certain small businesses.

    * Limited Benefit Insurance Polices--Delegate Daniel W. Marshall, III, described limited benefit, or "mandate-lite," health insurance policies. These policies would be allowed to exclude some or all of the mandated health insurance benefits contained in the Virginia Code. In 2007, Delegate Marshall introduced House Bill 3160 which provided for the sale of "mandate-lite" policies, but placed certain restrictions on them. The "mandate-lite" plans would only be available to small businesses who employ between two and 50 employees and to those employers who had not offered health insurance during the preceding six months.

    * Section 125 Plans--Stephen W. Bowman, Senior Staff Attorney for the JCHC described Section 125 plans. Section 125 of the Internal Revenue Code enables employees to purchase health insurance policies with pre-tax dollars and may allow for employee savings between 25 and 40 percent per dollar contributed toward health insurance.

    The Commission voted to endorse House Bill 3160 in concept, and discuss the sale of "mandate-lite" at its next meeting. The Commission also voted to adopt the position that no additional insurance mandates should be enacted during the 2009 Session of the General Assembly. The Commission also decided to monitor the actions of the JCHC with regard to Section 125 plans.

    December 9, 2008.

    The Commission held its final meeting prior to the 2009 Session in Richmond, Virginia, on December 9, 2008.

    The Commission revisited House Bill 352 (Cole) which was first considered by the Commission at its August 12th meeting. The Commission expressed concerns regarding the potential impact of lowering the amount of liability insurance on trolleys and declined to take any action on the bill.

    The Commission also received an update of the actions of the JCHC with regard to Section 125 plans. The JCHC endorsed several policy options including: (i) requesting that the Department of Human Resources Management, in conjunction with the Department of Business Assistance, create detailed documents highlighting Section 125 plans, posting a sample Section 125 plan form, and making these documents available to the business community, and (ii) requesting that the VCC and the Virginia section of the NFIB inform their membership about Section 125 plans.

    Senator Barker updated the Commission on the work of the Special Advisory Commission on Mandated Health Insurance Benefits. The Special Advisory Commission considered four mandates involving in vitro fertilization, hearing aids for children, amino acid based formulas, and autism services. Of the four, the Special Advisory Commission's only recommendation was for the autism services mandate.

    Finally, the Commission held a public comment period on the issue of "mandate-lite" health insurance policies. Delegate Daniel W. Marshall, III, spoke to the Commission about limited benefit health insurance policies in the form of his bill from 2007, House Bill 3160.

    Conclusion

    The Commission voted to endorse House Bill 3160 and directed staff to prepare the bill for introduction during the 2009 Session. The Commission also discussed issues for future consideration, including the availability of capital for small businesses.

    The Commission does not intend to submit a further report for publication.