The rising tide of healthcare

Employees can shoulder some premium hikes, but at what cost?
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Jul 01, 2006

WASHINGTON — Small business health plans were shelved May 11 to the chagrin of the American Veterinary Medical Association. But opponents say the proposal will do little to aid the millions of uninsured Americans and could actually raise the cost of healthcare premiums in the long term.

Formerly dubbed the association health plan proposal, the Health Insurance Marketplace Modernization and Affordability Act passed out of committee for the first time in 11 years, but the Senate could not make it filibuster proof, so it was never brought to the floor for a vote by the full chamber.

The legislation could lower the cost of healthcare premiums by allowing associations to amass insured lives into a larger pool for bargaining power with insurers.

Bill sponsor Sen. Mike Enzi, R-Wyo., introduced S.1955 as a compromise bill to alleviate its predecessors' sticking points, which revolved around state regulation. Enzi's proposal would require insurers to be licensed in every state where it enrolled participants into small business health plans. Subsequently, insurers would continue to be regulated by state insurance commissioners and subject to all state laws with the exception of mandate and small group market premium rating rules explicitly addressed in the bill.

Although the concessions helped build dialogue among those who support and oppose this type of legislation, Democrats refused to support the bill without adding its own reportedly unrelated health amendments that included extending the enrollment deadline for the Medicare prescription drug benefit, permitting the purchase of lower-cost prescription drugs from Canada and expanding federal funding for embryonic stem cell research.

Still, the bill has advanced further than it has in more than a decade and brought the insurance companies to the table, major steps in the right direction, says Katie Strong, Healthcare Policy Director for the U.S. Chamber of Commerce.

"This bill is not dead," she says. "There are folks, including Sen. Enzi, who would like to see it come up again in this session, and I think (senate majority leader) Sen. (Bill) Frist has said that if we can make the changes to the bill that will get us those few extra votes that we need, then he will bring it up, so we haven't stopped working on it."

Short of reintroducing the bill, Sen. Enzi says he will continue to work on small business health plan legislation via amendments to bills more likely to grace the Senate floor.

AVMA supports small business health plans because it would open the door for additional insurers to compete in markets they are not currently established. That competition likely will lower healthcare premiums, says Dr. Robert Nichols, assistant director of the AVMA Governmental Relations Division.

According to the Congressional Budget Office (CBO), small business health plans could reduce health insurance premiums by as much as 13 percent and provide health benefits to as many as 4.2 million Americans. However, it says many of those employees would have been offered health insurance under current arrangements, and much of the savings in premiums would be a result of plans that offer fewer benefits. "On balance, about 330,000 more people would be covered through small-firm employment than would otherwise have been the case," the CBO reports. Although that represents a 1.3-percent increase in coverage through small firms, it likely isn't enough for those lobbying for the about 44 million Americans currently uninsured.

"A lot of people who are against this legislation are probably the same people who want to see the government pay for universal healthcare," Nichols says.

Those opposed

Patient advocacy groups, state attorneys general, state insurance commissioners and medical provider organizations top the list of those fighting to keep associations from organizing across state lines.

American Cancer Society and the American Diabetes Association say the proposals will create second-class health insurance policies that will cherry pick the best risks and leave the state-regulated insurance markets with only the worst risks.

The American Association of Health Plans (AAHP) agrees, calling it a "further segmentation of the group market," says Larry Akey, AAHP spokesperson.