The cost of health insurance has been the No. 1 issue for National Federation of Independent Business (NFIB) members in Mississippi for 20 years. Unfortunately, the problem is getting worse, with many small businesses unable to afford health insurance.
“If something is not done soon, it will get to the point that some business owners might throw up their hands and say, ‘Government, take it over,’ or they will just all be uninsured and the government will have to pick it up somehow anyway,” said Ron Aldridge, NFIB state director for Mississippi. “NFIB members find that unacceptable in a free market economy, and want the opportunity for affordable coverage for themselves and their employees. It is about fairness for them, and being able to compete.”
NFIB is encouraged that recently the U.S. House of Representatives passed the Small Business Health Fairness Act. Similar versions of this bill have passed the House for the past seven years, but the bill has failed to get out of committee in the Senate.
Aldridge said the legislation would allow the free enterprise system to work across state lines. Mississippi businesses would be able to join nationwide insurance pools, Association Health Plans, regulated by the U.S. Department of Labor.
“Federal employees are pooled together across the country for their health plan,” Aldridge said. “And labor unions are pooled together all across the states. Why can’t small businesses come together for the same purpose? Now we are allowed to pool together in terms of purchasing products other than health insurance. Why can’t we do it for health insurance?”
Here’s an example
The appliance store industry is a good example of how businesses have pooled together across state lines to get better rates for bulk purchasing in order to compete against big chain stores.
“We want the same opportunity in the health insurance field,” Aldridge said. “They keep throwing daggers about how this will hurt us in the long run. But where has it hurt businesses doing other types of joint purchasing? State governments are forming all sorts of joint purchasing cooperatives, even to the detriment of small businesses selling things to the government.”
Currently, each state mandates certain benefits, and each state regulates insurance companies. Mandates can increase the cost of health insurance.
“Fewer mandates cost less,” said Jim Brown, Southeast region media communication manager for NFIB. “Now a small business owner has a choice of a Cadillac policy or nothing. What the small business owner wants is to look at every car in the lot and make decisions that make sense for them.”
Protecting their turf?
The biggest opposition to the legislation has come from state insurance commissioners and from large insurance companies. Brown said there are only about a half dozen major players in the health insurance business in Mississippi.
“They have a virtual monopoly to protect,” Brown said. “This legislation is not in their best interests. They are more worried about losing a certain share of the health insurance business than filling the needs of the uninsured small business owners and their employees.”
John Sewell, director of corporate communications for Blue Cross & Blue Shield of Mississippi, said his company supports efforts to improve access to healthcare for small businesses and their employees.
“But those efforts must include strong regulatory standards and consumer protections,” Sewell said. “Those standards and protections are not part of the legislation recently passed by the House.”
State Insurance Commissioner George Dale isn’t convinced that Congress can, by a stroke of the pen, make health insurance more affordable.
“I’m puzzled as to exactly how they intend to do that,” Dale said “The reason for the National Association of Insurance Commissioners’ opposition to the Small Business Health Fairness Act is that it creates a vacuum that we think will allow scam operators to flourish because of exempting this program from any form of state regulation. The Department of Labor would have jurisdiction over the plans, and my experience is the Department of Labor offers only a limited amount of oversight.”
Dale said there are some phony plans with limited regulation that go under the guise of “cheap health insurance.”
When insurance companies regulated by states go broke, the insurance industry is accessed to provide coverage for claims for the failed company.
“But many of these plans that are exempt from state regulation do not provide that benefit,” Dale said. “There is no protection. In my opinion, phony insurance plans are still a problem. Between 2000 and 2002, state insurance investigators shut down 41 illegal insurance operations. Within that same time frame, the Department of Labor shut down three. So, I’m of the opinion that state insurance departments can better regulate insurance than a federal agency like the Department of Labor.”
Dale said he sees nothing wrong with small business people pooling together to obtain more affordable health care insurance. That is encouraged.
“A major problem with small business is their benefit structure takes a bigger and bigger portion of the budget of the company,” Dale said. “I welcome them seeking out other ways to provide benefits to their employees. But just be sure the company that they offer to their employees can meet its obligations when called on to do so.”
Dale welcomes the NFIB’s efforts to give small business owners some relief for health insurance. And he said that the Small Business Health Fairness Act must not be all bad because all four of Mississippi’s representatives voted in favor of it.
“The plan does allow small businesses to band together to provide health insurance, and that is fine,” Dale said. “It also allows them to self insure by banding together as small businesses, and that is good. One thing the plan they passed does do, and I like this part, is companies may not cherry pick risks. If you take a small business with 10 employees, and eight are middle aged and beyond, very few people want to insure them. You don’t want companies that cherry pick only young, healthy workers.”
Likely to pass?
The bill may have a better chance in the Senate this year, as Senate Majority Leader Bill Frist (R-Tenn.) and President George W. Bush have voiced their support for the bill.
Aldridge said the legislation is badly needed to help the most uninsured group in the country — small business owners and employees.
“We are thankful to see all four Mississippi House members vote for this again,” Aldridge said. “At least this bill should get out of committee to let all of the Senators vote on this thing. Our own federal employees get to purchase health insurance across every state line. So why doesn’t a mom-and-pop deserve that same right?”
Lee Youngblood, spokesman for U.S. Sen. Trent Lott (R-Miss), said that the senator supports the concept of helping small businesses reduce the number of uninsured. But until there is more information and assurance that consumers would be protected from the splintered pool, he is not co-sponsoring the bill in the Senate.
“Sen. Lott has declined to cosponsor it while seeking assurances that consumers who are going to be purchasing policies won’t be affected by a splintered risk pool,” Youngblood said. “The opponents of this claim the make up and location of the risk pool are more important than the group purchasing power in reducing costs for health insurance.”
Youngblood said other legislation is also being considered in the Senate that would include provisions for Association Health Plans such as those included in House legislation.
Aldridge recommends that small business people in the state contact Lott and U.S. Sen. Thad Cochran (R-Miss.) and voice their concerns.
Contact MBJ contributing writer Becky Gillette at firstname.lastname@example.org.