A Bitter Pill

Pick up a newspaper and chances are good it contains something about a bitter pill better known as our nation's health-care system. Small businesses in particular find rising insurance premiums hard to swallow.

According to data compiled by the National Association of Wholesaler-Distributors (NAW), Washington, D.C., wholesaler/distributor employer-sponsored health insurance premiums rose an average of 19 percent from 2002 to 2003. For distributors with fewer than 50 employees, the increase averaged 23 percent. Compare these numbers to the national average per-employee cost of health benefits, which rose 14.7 percent, and there's no doubt the cost of health care is increasing at a rampant rate.

“From a public policy perspective, there are a couple of things our data make painfully clear,” said Jim Anderson, NAW vice president-government relations. “The first is that government at all levels must stop imposing cost-generating mandates on health insurance plans and the employers and workers who purchase them.

“The second is the urgent need for enactment of association health plan (AHP) legislation to enable smaller employers and their employees now struggling in the small group market to benefit from greater competition and choice in the marketplace.”

On March 13, Anderson testified before the U.S House of Representatives Education and Workforce Subcommittee on Employer-Employee Relations in support of the “Small Business Health Fairness Act of 2003.”

The bill authorizes the formation and multi-state operation of both self-funded and fully-insured health plans sponsored by certain trade associations. AHPs allow small businesses to buy into group health insurance plans anywhere in the country, enabling them to pay much less than they now pay for small policies directly from insurers. The major obstacle to AHPs to date had been varying state benefit mandates. The bill would change that by allowing small businesses to be exempt from state-specific mandates.

Through AHPs, smaller employers “would enjoy the same regulatory advantages, administrative efficiencies, bargaining power and economies of scale now available only to large corporate and union plans,” Anderson said.

The bill was introduced Feb. 11 by Reps. Ernie Fletcher, R-Ken.; Cal Dooley, D-Calif.; Sam Johnson, R-Texas; Nydia Velazquez, D-N.Y.; and others.

Identical AHP legislation has been introduced in the U.S. Senate by Sens. Olympia Snowe; R-Maine; Kit Bond, R-Mo.; Norm Coleman, R-Minn.; Elizabeth Dole, R-N.C.; Kay Bailey Hutchison, R-Texas; John McCain, R-Ariz.; and Jim Talent, R-Mo.

While those opposed to AHPs have been vocal in criticizing the initiative, their argument has not silenced the calls for assistance coming from small business owners, said a news release from the U.S. Small Business Administration (SBA). Those opposed to AHPs have argued that a practice of only insuring healthy workers will leave more vulnerable workers without insurance.

“I have heard the argument against AHPs, and I respectfully disagree with their position,” said Hector Barreto, administrator of the SBA. “This administration has made it clear that AHPs will have to comply with the Health Insurance Portability and Accountability Act (HIPAA), which would prevent such a practice from happening. I am confident that the Department of Labor would enforce such a policy just as effectively as they currently do for health insurance plans.”

In addition to support from NAW and SBA, AHP legislation is backed by a host of other associations, including Associated Builders and Contractors (ABC), Rosslyn, Va.; National Association of Manufacturers (NAM), Washington, D.C.; and Independent Electrical Contractors (IEC) Inc., Alexandria, Va.

“IEC members have been especially hard-hit by the skyrocketing costs of health insurance because the majority of all IEC member companies have less than 10 employees,” said Lou Schreier, IEC national government affairs committee chairman.

“It is among smaller employers where the uninsured problem is greatest,” said NAW's Anderson. “Enactment of AHP legislation would offer the prospect of real market-based solutions to a real and growing problem.”