Senate Struggles to Reduce the Ranks of the Uninsured

One of the toughest parts of the health insurance problem in the United States is that many small business can’t afford any coverage for their employees. Now, as part of a weeklong focus on healthcare, Senate Republican leaders have brought to the floor their chief solution, and it has a chance of passing.

The legislation would trim premiums for small businesses and, on balance, put an estimated 600,000 people on private coverage rolls, while also reducing the ranks of those with government-financed benefits. Similar bills have come up in the past, but this one appears to have better prospects of succeeding.

Yet critics warn that the bill would preempt state laws that spell out benefits insurers must provide and protect workers who are older and sicker from severe premium increases. The problem, they say, is that overriding the state requirements could trigger a race to the bottom as employers cut costs by replacing existing plans with bare-bones policies.

As a result, this week’s struggle over the GOP plan embodies one of the central challenges of healthcare reform: how to improve the lot of the uninsured without eroding the benefits of those already covered.

California, for example, has 23 specific benefits that insurers must provide and another 14 benefits that must be offered, usually at additional cost. Some mandatory California benefits and services, including reconstructive surgery, osteoporosis treatment and acupuncture, could be placed in jeopardy if the Senate bill passes.

Both California Atty. Gen. Bill Lockyer and Insurance Commissioner John Garamendi are warning the bill will undermine consumer protections, as are many of their peers in other states. The American Cancer Society, the American Diabetes Assn. and the seniors advocacy group AARP are also opposing the bill. The American Medical Assn. has expressed “strong concerns.”

“This bill seems to have a very simple concept behind it: You take a bunch of dry cleaners and pool them together, and because they are pooled together, they can get lower costs,” said Robert Laszewski, a healthcare consultant and former insurance executive. “The fact is, it’s a lot more complicated than that. Many people think it is about eliminating [insurance] reforms of the 1990s and allowing the industry to go back to cherry-picking customers.”

Of the 46 million uninsured people in the United States, eight in 10 are workers or their family members. With the cost of a family policy now averaging about $11,000 a year, small-business employees are the least likely to have coverage. Fewer than 40% of those in companies with three to nine employees have insurance coverage through their jobs.

The National Federation of Independent Business, the National Assn. of Realtors and the Associated Builders and Contractors are all backing the Senate legislation.

If the bill passes, the credit would go to its chief sponsor, Sen. Michael B. Enzi (R-Wyo.), chairman of the Health, Education, Labor and Pensions Committee. A low-key legislator who works across party lines in a polarized Congress, Enzi has tried to address the concerns of critics by softening some of the provisions of the House-passed version of the bill. His efforts have won him the support of Democratic Sen. Ben Nelson of Nebraska, a former state insurance regulator.

“We have drastically changed the [House-passed] bill,” said Enzi. “This legislation still keeps the power of oversight and consumer protection in the hands of state insurance commissioners.... Maybe we are somewhere right there in the middle.”

Enzi said critics’ fears that insurers would jettison valuable benefits in a race to the bottom were unlikely to come true. He pointed out that big employers already were exempt from state coverage rules, and most offer comprehensive benefits to their workers. His bill says that any insurer offering a bare-bones plan to small businesses must also offer coverage that is at least as good as what public employees get in one of the five largest states.

The Democratic alternative to Enzi’s bill, sponsored by Sen. Richard J. Durbin (D-Ill.), would preserve state coverage requirements. More importantly, it would provide tax credits to help employers obtain coverage for low-wage workers. Durbin estimates his bill would cover more than three times as many people as would Enzi’s.

But Democrats are looking for a broader debate on healthcare. In addition to the Durbin bill, they are seeking floor votes on funding for stem cell research, allowing prescription imports from Canada and extending the May 15 signup deadline for the Medicare drug benefit.

Enzi hinted that he would accept some amendments to his bill, especially if they would peel off some Democratic votes. But Senate Majority Leader Bill Frist (R-Tenn.) has not said whether he would allow Democrats a platform on a broad range of healthcare issues. If Frist opts to keep the debate narrowly focused, Democrats have threatened to filibuster the legislation. And observers believe Enzi is short of the 60 votes that would be needed to overcome it.

“If Sen. Frist decides to close down debate, I think there will be a lot of resistance on the Democratic side,” Durbin said.

Meanwhile, an analysis by the nonpartisan Congressional Budget Office found that Enzi’s bill would benefit most small businesses, but not all. About one fourth of employees would face higher premiums. And though 700,000 people who are now uninsured would gain private coverage, about 100,000 who are now covered would lose their insurance.