Health-care premiums, often paid by employers on workers’ behalf, will increase by 30 per cent as announced by the Alberta government in its late-March budget. The hike is one of 44 recommendations to change health care in the province.
This will have significant impact on the business world, said Dan Kelly, vice-president for the Canadian Federation of Independent Business (CFIB) in Calgary.
Employers in Alberta have the option of paying all or part of their employee’s premium at a fixed rate or they can choose not to pay for premiums at all. This option is exclusive to both Alberta and British Columbia since other provinces such as Ontario pay the health-care tax as a percentage of payroll.
With the current increase, Alberta employers may end up paying as much as $240 per worker and many business owners are now contemplating the continued payment of premiums. Auto Trans Inc., an Edmonton-based supplier of parts to the automotive industry, pays half of its staff’s premium costs. Henry Harks, manager of administration and finance for Auto Trans, said the rise in premiums will ultimately affect their bottom line.
“We may have to look at other options to mitigate the damages. Does it mean we have to increase the price of products to our customers? I don’t know. It’s a cost-driven thing.”
About one-third (35.7 per cent) of small- to medium-sized companies say premium increases will force them to reduce or drop coverage, according to a report by CFIB. The association asked more than 4,000 of its 8,700 members to complete a Web-based survey to get a grasp of the impact on the business community. Approximately 20 per cent said the increase would drive them to make cuts in salaries, benefits and planned raises.
“Any time a payroll tax increases, it impedes the business’ ability to grow, given that the premium is linked to the salary...they’re going to have to find that money somewhere else. Payroll taxes are generally regarded as job killers,” said Kelly who met with government representatives and presented the survey results.
Kelly said it also impacts employers that don’t pay staff premiums. If an employer’s not paying an employee’s premium, then it lands on the shoulder of the worker to pay. The theory is that employees will start demanding higher salaries in order to compensate for the cost of health-care premiums.
While companies in Alberta received some warning of the impending hike, businesses in British Columbia weren’t as lucky. In February, the B.C. government announced it will increase Medical Service Plan (MSP) premiums by 50 per cent as of May 1. B.C. Finance Minister Gary Collins also indicated premiums may rise an additional 60 to 70 per cent.
B.C.’s monthly premium rate will go from $36 up to $54 for singles, couples will see an increase from $64 to $96 and family rates will climb from $72 to $108.
“We didn’t have any warning this was coming,” said Suromitra Sanatani, vice-president for CFIB in B.C. and the Yukon. “This is going to be hard for small businesses and our members are very concerned.”
Sanatani said the organization is going to do a survey similar to that of CFIB in Alberta, and intend to let the government know about its opposition to the increases. Things need to be turned around, she said.
“We have a lot of challenges in this province and health-care costs are going through the ceiling.”
In Alberta, the dislike over decisions made by government is much the same, Kelly said.
“Spending in this province has gone through the roof, it has everything to do with the government’s lack of spending control as opposed to a policy designed to help solve the health-care issues.”
It was time for action to build a better public health system and change the way Canadians perceive it, said Alberta Health and Wellness Minister Gary Mar.
“We are proposing made-in-Alberta solutions that look beyond the status quo and focus on opportunities,” he said.
No one is opposed to improving health care, said Kelly, but there has been absolutely no consideration for small businesses.
This will have significant impact on the business world, said Dan Kelly, vice-president for the Canadian Federation of Independent Business (CFIB) in Calgary.
Employers in Alberta have the option of paying all or part of their employee’s premium at a fixed rate or they can choose not to pay for premiums at all. This option is exclusive to both Alberta and British Columbia since other provinces such as Ontario pay the health-care tax as a percentage of payroll.
With the current increase, Alberta employers may end up paying as much as $240 per worker and many business owners are now contemplating the continued payment of premiums. Auto Trans Inc., an Edmonton-based supplier of parts to the automotive industry, pays half of its staff’s premium costs. Henry Harks, manager of administration and finance for Auto Trans, said the rise in premiums will ultimately affect their bottom line.
“We may have to look at other options to mitigate the damages. Does it mean we have to increase the price of products to our customers? I don’t know. It’s a cost-driven thing.”
About one-third (35.7 per cent) of small- to medium-sized companies say premium increases will force them to reduce or drop coverage, according to a report by CFIB. The association asked more than 4,000 of its 8,700 members to complete a Web-based survey to get a grasp of the impact on the business community. Approximately 20 per cent said the increase would drive them to make cuts in salaries, benefits and planned raises.
“Any time a payroll tax increases, it impedes the business’ ability to grow, given that the premium is linked to the salary...they’re going to have to find that money somewhere else. Payroll taxes are generally regarded as job killers,” said Kelly who met with government representatives and presented the survey results.
Kelly said it also impacts employers that don’t pay staff premiums. If an employer’s not paying an employee’s premium, then it lands on the shoulder of the worker to pay. The theory is that employees will start demanding higher salaries in order to compensate for the cost of health-care premiums.
While companies in Alberta received some warning of the impending hike, businesses in British Columbia weren’t as lucky. In February, the B.C. government announced it will increase Medical Service Plan (MSP) premiums by 50 per cent as of May 1. B.C. Finance Minister Gary Collins also indicated premiums may rise an additional 60 to 70 per cent.
B.C.’s monthly premium rate will go from $36 up to $54 for singles, couples will see an increase from $64 to $96 and family rates will climb from $72 to $108.
“We didn’t have any warning this was coming,” said Suromitra Sanatani, vice-president for CFIB in B.C. and the Yukon. “This is going to be hard for small businesses and our members are very concerned.”
Sanatani said the organization is going to do a survey similar to that of CFIB in Alberta, and intend to let the government know about its opposition to the increases. Things need to be turned around, she said.
“We have a lot of challenges in this province and health-care costs are going through the ceiling.”
In Alberta, the dislike over decisions made by government is much the same, Kelly said.
“Spending in this province has gone through the roof, it has everything to do with the government’s lack of spending control as opposed to a policy designed to help solve the health-care issues.”
It was time for action to build a better public health system and change the way Canadians perceive it, said Alberta Health and Wellness Minister Gary Mar.
“We are proposing made-in-Alberta solutions that look beyond the status quo and focus on opportunities,” he said.
No one is opposed to improving health care, said Kelly, but there has been absolutely no consideration for small businesses.
