San Diego Business Journal

Historic federal health care insurance legislation to be considered as early as next week would have a major impact on California’s small businesses.

The type of effect depends on whom you ask.

The bill, the Health Insurance Marketplace Modernization and Affordability Act, is in the U.S. Senate and would allow trade organizations to offer health insurance plans. Some variation of the plan has been around for years, said Marion Mulkey, of the Oaklandbased California HealthCare Foundation, but it has never gotten this close to being approved.

While health plans under the bill would cover fewer services, they would cost less for businesses, argues the bill’s biggest supporter, the Nashville, Tenn.-based National Federation of Independent Business. The group represents 600,000 member businesses. If the bill is approved and the NFIB offers its members a policy, the Wall Street Journal has reported, NFIB could reap $100 million annually.

NFIB California Assistant Director Michael Shaw said the bill, which won approval from the U.S. Senate’s Health, Education, Labor & Pensions committee in mid-March, would lower premiums for small businesses here by 20 percent to 30 percent.

“Small businesses would band together across state lines and essentially increase their bargaining power,” Shaw said.

Some trade groups currently offer health plans, but they do so in one state at a time.

Health care services that at least 45 states require insurers to cover will be mandated under Senate Bill 1955 as well.

Less Coverage

But the bill would not require the trade group plans to cover around 20 services now guaranteed to small-business employees in California, such as the right to a second opinion or to see a gynecologist, and many preventive care services.

“California has a lot of strong patient protections — more than a lot of other states,” said Carmen Balber; of the Foundation for Taxpayer and Consumer Rights, a nonprofit consumer advocacy group based in Santa Monica.

Balber said the bill would allow insurance companies to widely vary individuals’ rates. She said under SB 1955, trade group plans could deviate from a formula by as
much as 25 percent, whereas currently, health plans that operate here can only
go about 10 percent beyond the standard for premiums.

Millions Lack Insurance

The bill comes as states such as California are searching for ways to insure the 44 million Americans without a health plan – 27 million of whom are owners, employees, or dependents of small businesses with fewer than 100 workers, according to the NFIB. California has nearly 7 million uninsured.

The California Association of Realtors said it has a “neutral” stance on the pending federal legislation, but goes on in a written statement to say that SB 1955 would provide inferior coverage.

“Californians would be forced to choose between rising costs and lesser benefits,” the statement read. “No longer would Californians decide what’s best for California.”

A spokesman there said Realtors typically buy their own insurance plans.

Mulkey, with CHF, said her group did a survey in 2004 about trade association health plans like the ones proposed in SB 1955.

The analysis showed that in California, small businesses that had older, sicker employees might find the bill detrimental, and that the overall number of people insured in the state would not change much.

“There would be a shift in who was uninsured, from younger, healthier people to older, sicker people,” Mulkey said.

Experts said that’s because of more lax rules the plans could follow on whom they must cover and how.

Scott Hauge, the president of San Francisco-based Small Business California, a nonprofit advocacy group, does not support SB 1955, and called it an “awful bill.”

He recently conducted a survey among California small businesses regarding the legislation in Massachusetts that has garnered a national spotlight as a creative way of insuring residents.

That Massachusetts plan would require businesses and individuals to buy health plans or pay fines. A part of the plan vetoed by Mitt Romney, the state’s Republican governor, would have required businesses larger than 11 people to pay the state $295 annually per employee if they declined to offer health insurance.

Hauge’s survey included 150 respondents from around California, including San Diego, where one in five residents are uninsured, according to the San Diego-based Alliance Healthcare Foundation.

Of 150 respondents in the survey, 74 percent supported the Massachusetts plan, 15 percent opposed it, and 11 percent did not know how they felt.

When asked if they would be willing to pay $295 per year per employee, 74 percent said yes, and 26 percent said no, Hauge said.