CraftsReport: National Health Care Crisis

o one denies that skyrocketing health insurance costs are making it increasingly difficult for small businesses to provide these benefits to their employees. but government, big insurance companies and small-business groups are at odds about how to handle the growing problem.

According to data provided by the National Federation of Independent Business (NFIB), more than 39 million Americans have no health coverage.
Sixty percent of those without health insurance in the United States are currently working year-round, in full-time jobs, says Scott P. Serota, president and CEO of the Blue Cross and Blue Shield Association (BCBSA).
On average, a worker in a firm with less than 10 employees pays 18 percent more for health insurance than a worker in a firm that employs 200 or more employees (NFIB).
The New York Times recently reported that small businesses should expect to face double digit increases in health costs in 2003, forcing them to shift more costs to employees or drop coverage altogether.
A recent study conducted by The Kaiser Family Foundation’s Health Research and Educational Trust found that premiums for employer-sponsored health insurance at small companies (3-199 workers) increased an average of 12.5 percent in 2001, compared with 10.2 percent in 2000.
The smallest companies (3-9 workers) saw the largest average premium increase — 16.5 percent, according to the study.

One problem seems to be the disparity of access to affordable coverage between big companies, with hundreds or thousands of employees, and small companies with as little as one or two employees. Big companies have large scale buying power, and small companies do not. In fact, nearly 25 million small businesses in America employ more than half the country’s private work force. Yet, the cost of health insurance is becoming cost prohibitive for small and upstart enterprises, forcing many to discontinue coverage for employees, or not offer it at all. The National Federation of Independent Business (NFIB), the nation’s largest small-business advocacy group, says that’s because under current federal laws, small- business owners cannot band together to provide group coverage across state lines. This prevents small-business owners from having enough buying power to keep costs down.

President Bush is perhaps the highest profile supporter of legislation that would eliminate those restrictions. As recently as March, Bush remarked at a summit of women entrepreneurs “It makes no sense in America … to isolate small businesses as little health care islands unto themselves. We must have association health plans.” The NFIB is a strong proponent of Association Health Plan (AHP)
legislation, which passed through the House of Representatives last August, but didn’t make it into the Patients’ Bill of Rights, which was signed into law.

The AHP debate

While AHPs currently exist, they are hampered by the administrative burden and high cost of having to comply with 50 different sets of state insurance laws and regulations, according to NFIB literature. The NFIB contends that these barriers make it cost prohibitive for new plans to be started, limiting the availability of affordable health insurance for small businesses.

Opponents of the legislation include large insurance companies, like Blue Cross/Blue Shield, and even small business groups like National Small Business United (NSBU). These groups contend that taking regulatory power away from the states, and putting it in the hands of the Federal government, would open the doors to fraud, and ultimately become more costly for small-business workers.

The Blue Cross and Blue Shield Association (BCBSA), an umbrella organization that unites independent Blue Cross/Blue Shield plans across the country, says AHPs could end up causing costs to go up, not down.

BCBSA contends that AHPs could invite the same sorts of fraud and abuse that plagued the small group health insurance market in the 1970s and 1980s. According to Eleanor Hill of the law firm King & Spalding, who headed up a Senate investigation into fraudulent health plans in 1990, “The AHP provisions would remove the broad protection provided by experienced state regulators and replace it with a limited, and clearly inadequate, federal regulatory framework.”

The NFIB disputes that claim, however, saying that AHPs would enhance efforts to prevent fraud and abuse by clarifying and strengthening the rules regarding what is and is not a legitimate multiple employer health plan.

The proposed legislation, according to NFIB, grants states and the U.S. Department of Labor greater enforcement tools, including criminal sanctions that can be used to shut down bogus plans.

According to proponents of the legislation, AHPs would expand access and choice in affordable health plan options for working families employed in small businesses. A 1998 study by CONSAD Research Corporation estimated that up to 8.5 million uninsured small-business workers could gain coverage if AHP legislation was enacted. Proponents also add that AHPs are the only option that puts the self employed and small businesses on a level playing field with large company and union health plans. “Labor unions and big corporations already have the ability to purchase health insurance at discounted rates; small business is simply asking for that same right,” says NFIB Senior Vice President Dan Danner. “If Congress approves AHPs, trade groups like NFIB could negotiate with insurance companies and purchase tens or even hundreds of thousands of policies at a lower rate, then pass the savings along to their members. Studies show that AHPs would save the typical small-business owner between 15 and 30 percent on health insurance and help as many as eight million currently uninsured Americans afford the coverage they need.”

Status of legislation

“At this point,” says Laura Pemberton, a media representative for NFIB, “we are trying to find a vehicle to carry this legislation in the Senate.” The legislation has already passed in the House several times, the latest being August 2001. The legislation was at one point attached to The Patients’ Bill of Rights, but was removed from that bill before it was finally signed into law.
The NFIB strongly urges the working uninsured to contact their state legislators to voice their support for the legislation, says Pemberton.

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