Congress Eyes Health Insurance Reforms

The companies that provide health insurance for small businesses have become an appealing target for lawmakers casting around for ways to repair the nation’s ailing health-care system.

Stories about companies denying coverage, leaving families in financial ruin and imposing huge premium increases have gotten the attention of Congress.

But new industry controls appeal to lawmakers for another reason: They could extend private insurance coverage to as many as two-thirds of the 33 million uninsured Americans at little direct cost to the federal government.

“It is always cheaper for the federal government to change conditions by regulating than by paying for new services,” Sen. Dave Durenberger (R-Minn.) wrote in the latest issue of the Journal of American Health Policy. “It solves an important problem without directly increasing the budget deficit.”

About 20 million of the nation’s uninsured are full-time workers and their dependents. Of that group, about 16 million work for small businesses, are self-employed or are dependents of these workers, according to Durenberger.

In small businesses, even one major illness is enough to result in unaffordable premium increases and the loss of a company’s group plan. Some lines of business are considered too risky to even qualify for insurance.

Congress is considering proposals that generally would prohibit insurance companies from refusing to issue or renew policies or from excluding anyone from group coverage. Other provisions are designed to ensure continued coverage when a worker changes jobs--regardless of medical condition--and to limit premium increases.

Some would require insurance companies to base premiums on the cost of health care for the entire community--called “community rating”--rather than on the experience of the group being covered.

The insurance industry has its own alternatives for change.

“We believe that for the 25-(workers)-and-under market, we’ve got to change the way we do business,” said Linda Jenckes, director of federal affairs for the Health Insurance Assn. of America. “The overriding problem is cost, and we’re aware of that.”

The average cost of health insurance is around $3,200 per employee, according to Durenberger.

HIAA is adamantly opposed to community rating and wants the states, not the federal government, to remain the nation’s key insurance regulators.

The Bush Administration is watching the health insurance debate closely, but has not offered its own plan.

Durenberger and other members of Congress say the proposed changes would cost taxpayers nothing. Some proposals, however, also include tax breaks for insurance companies and for employers, which could mean lost revenues to state and federal coffers.

HIAA’s plan is most similar to the package introduced by the Senate Democratic leadership.

In that plan, small-group reforms are part of a comprehensive proposal that would address all segments of the market with a core requirement that is known as “play or pay.” That would require employers to provide health insurance for their workers or contribute to a public insurance plan.

Sen. Jay Rockefeller (D-W.Va.), chairman of the Senate Finance subcommittee on Medicare and long-term care and one of the architects of the Senate plan, says that while it is vital to make insurance affordable to small businesses, he will not settle for that alone.

“I recognize that it’s budget neutral, and I also recognize that without small-market health reform, cost-containment isn’t possible, and if that isn’t possible, then access isn’t going to be achieved.”