Help small businesses afford health insurance
0:50 AM 7/01/03

Here is a simple and effective way to help small businesses provide health insurance to their employees at an affordable cost: Permit employers to join together to shop for insurance at volume discount rates. The House of Representatives has passed legislation to make that happen. The Senate should do the same.

The legislation's aim is to attack the escalating cost of health insurance for small businesses, which have reported insurance rate increases of 30 percent and more during the past year. The increases are squeezing profits, forcing employees to contribute more to their insurance and even prompting some businesses to cut back their health coverage or avoid health insurance altogether.

About 60 percent of the nation's uninsured work for small businesses or depend upon someone who does.

Contributing to the cost problem for small businesses is the fact that one small company does not provide enough business to attract the lower rates available to large corporations with thousands of employees. As one congressman noted, the cost of one can of soda pop from a vending machine is considerably more than the cost of one can of pop from a case purchased at a discount market. Buying in bulk gives you a volume discount.

Allowing small businesses to join in trade associations to buy health insurance would permit them to buy in bulk for the volume discounts. They could even choose to self-insure if permitted to pool their resources through a trade association.

Some groups already sponsor pooled small-business health plans. But they are allowed only on a state-by-state basis and must abide by state regulations. That prevents the big savings that national small-business associations could offer.

The Wisconsin Legislature passed a small-business pool plan for health insurance in 1999. But the plan failed to attract funding and is now under study by a committee.

The legislation does not provide a perfect solution. The bill passed by the House would waive states' minimum coverage standards. That waiver will cause problems for some people with health problems. But, in exchange, it will permit cheaper, basic coverage health insurance. The plan would be subject to federal oversight.

In addition, there are concerns that businesses with young, healthy workers may end up paying more for health insurance when pooled with companies employing older workers and workers with health problems.

Nonetheless, the legislation offers small businesses an opportunity to control rising health insurance costs. It also offers the country an opportunity to get more people covered by health insurance. It ought to become law.