Health Insurance Crisis Threatens Small BusinessesPosted 5/10/2004
By Sen. Olympia J. Snowe, R-Maine
In his State of the Union address, President George W. Bush gave resounding support to continuing efforts to address the crisis of the uninsured. And make no mistake - it is a crisis. At this writing, an estimated 43 million people in the United States have no health insurance - and about 60 percent of these are employed by a small business or are part of a family whose income derives in some way from a small business.
As the president has indicated, the best way to give small businesses the relief they desperately need is to create national Association Health Plans (AHPs). The AHP model works because it allows small businesses to pool their employees on a national basis by using their membership in legitimate trade associations to purchase group health insurance plans. As a result, these associations can then use their new market power and administrative efficiencies to reduce insurance costs and increase options.
While AHPs will make insurance more affordable for workers and their families, a second benefit is less obvious: small business owners armed with the purchasing clout AHPs provide would be able to turn their attention to creating new jobs. Small business owners have told me repeatedly that the high cost of health insurance keeps them from increasing their hiring because new employees can translate into crippling expenses.
In March 2003, I introduced Senate Bill 545, The Small Business Health Fairness Act of 2003, which will create national AHPs. This bill will improve access to affordable health care for small businesses by giving them the same advantages currently enjoyed by large employers and unions. It will allow associations to design health insurance plans tailored to meet their members' needs and pool their employees on a national basis. The associations would then be able to either purchase their insurance from a provider or self-insure in the same way that many large employers and unions do.
S. 545 would provide extensive new protections to ensure that health care coverage is available when employees need it, and to prevent the current epidemic of fraud perpetrated by sham associations that take money from small businesses and vanish when an employee files a claim. Self-funded AHPs would be required to have sufficient reserve funds and meet other funding and certification standards - stronger requirements than currently mandated for the self-funded union and large employer plans. Insurance companies that provide coverage for AHPs would remain regulated by the states to ensure their customers would have the same protections they currently enjoy.
And finally, AHPs would help small businesses without expanding the federal budget deficit. The AHP model leverages the inherent strength of the marketplace to provide better insurance without committing the federal government to expensive new outlays.
AHPs are synonymous with good business, good sense and good policy. They are the best way to give small businesses more affordable health insurance choices and the opportunities they need to create new jobs.
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