The result was that many small companies dropped insurance, increased employee contributions or reduced benefits. Without the cost savings brought about by managed care, many more companies would have been forced to drop or reduce health-insurance benefits. During the same period, Texas went through a crisis in workers' compensation, which resulted in major changes in the system. Those changes have brought about significant improvements, which now are showing up as reductions or discounts in rates as high as 80 percent. However, it is becoming apparent that many small businesses are not benefiting from the savings brought about by the 1989 reform legislation.
Insurance is a significant labor-related cost.
It ultimately affects both the costs of goods and services and the competitive position of Texas businesses in national and international markets. Money spent on insurance reduces the amount of money available for wages. High insurance costs adversely affect economic development and job creation. In recent years, Texas has enacted a great deal of insurance-reform legislation. Small group-reform legislation was enacted in each of the last three sessions.