A renewed move to boost small businesses’ health coverage

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Scripps Howard News Service

Elaine Smith easily delivered 4 million pamphlets on “How to Raise a Healthy Puppy” to the nation’s veterinarians, but she found it harder to come through on health care for her employees until a valued worker called a doctor’s visit a luxury she couldn’t afford.

Smith not only picked up the $225 tab for treatment but got health insurance for each of her 10 full-time employees at E. Smith & Associates, a public-affairs firm in suburban St. Louis. She and her workers split the cost 50-50, but the 30 percent increase in the company’s 2006 premium bill “makes you wonder about Cadillac coverage for my young, healthy staff when they have virtually no insurance claims.”

Smith and other small-business owners active in the National Federation of Independent Business (NFIB) are backing action that President Bush has pushed since he took office: a federal law to override state insurance regulations and let small businesses join across state lines when buying health coverage.

Legislation to allow small businesses to pool health-insurance purchases across state lines through Association Health Plans has passed the House a half-dozen times only to die in the Senate.

But now a bill ready for full Senate consideration would let small firms band together, based on trade-association memberships, to buy health insurance free of state regulation.

The change would partly reverse the states’ traditional role regulating “the business of insurance,” in which states set coverage requirements and pricing rules for health insurance and other coverage for in-state businesses and individuals so that the risks are spread across the pool of policyholders.

Instead, the Senate measure:

  • Would let insurers sell health-insurance plans that don’t meet current state requirements so long as they offer plans that conform to benefits that the five most populous states — California, Florida, Illinois, New York and Texas — offer state employees.
  • Would replace state requirements with a nationwide standard limiting how much insurers can vary premiums from one small business to another. However, states would still supervise policies rather than turn oversight over to the U.S. Department of Labor.

“Businesses everywhere are struggling with the soaring cost of health insurance, and they want to offer good benefits for their employees,” says chief Senate sponsor Mike Enzi, R-Wyo. “They ought to be able to leverage their strength in numbers, but the differences between state laws make it too complex and costly.”

Before Congress left for a St. Patrick’s Day recess that ends next Monday, the Senate Health, Education, Labor and Pensions Committee that Enzi chairs approved the bill, 11-9, along party lines, with Republicans for it and Democrats against.

It is the top priority of the NFIB, a small-business lobby that claims 600,000 member firms. NFIB executive vice president Dan Dannger said enactment would go a long way toward helping the “more than 27 million of the uninsured across America (who) are small-business owners, employees and their dependents.”

The measure has the support of more than 190 trade groups as diverse as the National Restaurant Association, the Realtors and the National Association of Disc Jockeys.

But more than 1,300 other consumer, patients’-rights and small-business groups disagree. They complain that lack of state oversight could eliminate key benefits, such as well-child care, mammograms and mental-health coverage, while raising rates.

Critics point to the fact that health-insurance pools for small business and the self-employed have been in force since the late 1980s, but hit a snag when small firms with young, healthy workers objected to being pooled with companies with older, sicker workers who raise the cost of coverage.

That’s when states stepped in to spread the risk between high- and low-cost workers and stanched the rising tide of uninsured workers and soaring premiums awhile, researchers at the nonpartisan Urban Institute concluded.

But the truce proved short-lived as small-business coverage resumed plunging from 68 percent in 2000 to 59 percent today in the face of double-digit premium increases, the nonpartisan Kaiser Family Foundation reports.

However well-intentioned Association Health Plans may be, Denver benefits expert Bill Lindsay disputes claims that their larger marketing clout will automatically translate to lower premium costs for health insurance if they let groups revert to cherry-picking businesses with young healthy employees over those with an older work force.

A former chair of the National Small Business Association, a 100,000-member group, Lindsay points to Congressional Budget Office predictions that the 13 percent premium savings Association Health Plans could cause will come at the expense of premiums for everyone else and add another 1 million Americans to the 43 million without health coverage.

Association Health Plans “are not only a non-answer to the real issues driving costs, but will exacerbate the problems small businesses face,” Lindsay warns.

Ron Pollack of the health advocacy group Families USA adds that this and other Bush health-care initiatives including tax-favored Health Savings Plans aim to skim healthy people from the rest of the population and convert America’s employer-based health-insurance system to one in which individuals bear all the risk.

For now the insurance industry isn’t taking sides, waiting to see if the Senate passes the measure or settles into a filibuster. The Blue Cross/Blue Shield Association, the umbrella group for the Blues in 47 states, for instance, fought the House-passed version and considers the Senate bill an improvement for keeping some state oversight. Still, Allisa Fox, the association’s executive director for policy, says the group continues to have concerns with the Senate version.

Even so, critics count on the power of patients’-rights advocates like Dana Christensen to make their case. The Playa del Rey, Calif., widow told senators how her husband, Doug, begged on his deathbed for a divorce because their Association Health Plan, including its chemotherapy rider, amounted to “junk” insurance that covered only18 percent of his treatment for bone cancer and saddled her with more than $450,000 of his medical bills.

“Insurance isn’t worth a dime if it doesn’t pay for treatments you can’t live without,” Christensen says.
Contact Mary Deibel at [email protected]

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