Health care: big problem for small business: Wyoming lawmaker's proposed legislation could end 10-year Senate impasse on controversial solution

November 28, 2005

More than 45 million Americans lack health insurance. And more than half of them are employed or dependent on someone who works for a small business, according to the National Federation of Independent Business.

It's a big problem-especially in Indiana.

Between 2000 and 2004, 5.6 percent of Hoosier workers lost employer-provided health care, according to the Economic Policy Institute. That's a higher percentage than any state except Wisconsin.

Legislation just introduced in Congress by Wyoming Sen. Michael Enzi, however, may kick the doors off a 10-year impasse on the NFIB's preferred solution-small-business health plans.

The plans, also known as association health plans, would allow companies to pool their health care dollars to gain bargaining power. For example, a pizza shop owner who employs five people would band with her peers at pizza shops, bars, delis and Indian restaurants in all 50 states to get a whale of a deal.

Some chambers of commerce, including Indianapolis', already offer group health care plans, but Enzi's legislation would expand the concept beyond state borders to create national pools.

"It would be a huge help," said Steve Fero, owner of Indianapolis-based Career Solutions Group Inc. "It requires volume to have purchasing power."

Fero's health care costs have risen so dramatically in recent years that his insurance company boasted this year of keeping his premium increase to 9 percent. With a small-business health plan, he could actually save money.

Enzi's bill, known as the Health Insurance Marketplace Modernization and Affordability Act of 2005, could pave the way. The Congressional Budget Office predicts small-business owners could save 15-30 percent on health care premiums. And as many as 8 million people without health care finally might get laminated insurance cards for their wallet, according to the Pittsburgh-based Consad Research Corp.

It's been a long time coming.

U.S. Rep. Harris Fawell, an Illinois Republican, introduced similar legislation in 1995. Since then, House lawmakers have approved some form of the idea every session, but it has yet to get a vote in the Senate.

That will likely change. Enzi is the Republican chairman of the powerful Senate Committee on Health, Education, Labor and Pensions, which oversees all federal health legislation. His endorsement may be enough to get the idea over the hump.

A compromise approach

When he introduced the legislation on the Senate floor Nov. 2, Enzi referred to it as a "compromise approach" because it addresses the two biggest criticisms of previous versions of the legislation.

Most important, earlier versions of the legislation put the federal government in charge of the plans. Critics, such as Democratic Indiana Sen. Evan Bayh, worried that Uncle Sam did not have the resources to oversee such a plan. If the federal government can't figure out Amtrak, skeptics asked, how is it supposed to administer a new insurance program for millions of people?

The federal government also doesn't have as many consumer protection laws on the books as individual states.

"[The plans] would hurt the people that need the protection that state regulations brought them," said Bill Vaughn, a senior policy analyst with Washington, D.C.-based Consumers Union. "Other than that, Mrs. Lincoln, how did you like the play?"

That's why some companies, such as Indianapolis-based WellPoint Inc., the largest insurance provider in the country, have historically opposed the idea.

"In general, we do not support [the original legislation]," said WellPoint spokesman Jim Kappel.

Under Enzi's bill, however, states would oversee the plans.

The Wyoming lawmaker seems to have addressed the second-biggest criticism of the plans as well by requiring them to abide by common health care mandates.

Some states require benefits such as cancer screenings and mental health parity, for example, but others do not. Critics have argued that cost-conscious executives would establish the plans in the states with the fewest required benefits.

Under Enzi's bill, however, the plans must include any mandate already required in at least 45 states.

Most feedback is positive

As a result of the concessions, the response has been largely positive, said Craig Orfield, spokesman for the committee hearing the bill. Although many local groups have not reviewed the legislation, national trade groups are poring over it.

Seven of them have already sent Orfield letters of support. Surprisingly, some of them have been old adversaries.

"For years we've really battled this legislation," said John Parker, a spokesman for the national BlueCross BlueShield Association in Washington, D.C. "We're hopeful that there are better options out there and this may be one of them."

One remaining criticism for skeptics-including Republican Indiana Sen. Richard Lugar-is that association health plans would "split the risk pool," creating one population made up of healthy people and another of sick people.

The healthy would inherently opt for lower-cost national pools while sicker populations would remain in the more costly state plans because they offer more benefits and protection. That means healthy people would ultimately get really cheap insurance while sick people would endure potentially catastrophic cost increases.

Despite the concern, BlueCross BlueShield is close to hopping on board with the new plan. The organization's president, Scott P. Serota, sent a letter to Enzi saying his organization had identified a few concerns but agreed the bill "is consistent with the principles we believe are necessary to create a market framework that best serves customers."

Yet while critical mass may be building, the idea won't make it through the Senate without a fight. Some consumer groups argue the bill puts the federal government in charge of regulating health care without giving it any money to accomplish the task.

"It's an attempt to federalize the regulation of health insurance without really regulating it," said Mila Kofman, an assistant research professor in Georgetown University's Health Policy Institute. "That's like buying a car without an engine. When you buy a car, you want four doors, windows and an engine. It's the same with health insurance."

Kofman may have a chance to voice her criticisms to lawmakers in the near future. The bill will likely get a hearing in December or January, said Susan Eckerly, the NFIB's vice president of lobbying. After that, it could end up on the floor by March. At that point, the ride may get bumpy.

"I imagine because it's a health care bill there will be a vigorous debate," Eckerly said. "I would hope it's not filibustered."

She may have a trump card.

An election year is weeks away, one insider said. Lawmakers are hungry for campaign trail bragging rights. Reducing the cost of health care makes a really nice sound bite.
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