Small-business owners unable to afford the high cost of health insurance may soon have some good news for their employees. Legislation is moving forward that allows small-business trade associations such as the U.S. Chamber of Commerce and the National Association for the Self-Employed to set up inexpensive, self-insured national health insurance pools for their members.
The Expanded Portability and Health Insurance Coverage acts (H.R. 1515/S.729), sponsored by Rep. Harris W. Fawell (R-IL) and Sen. Tim Hutchinson (R-AR), will ideally encourage more small businesses to provide insurance for their employees by establishing these Association Health Plans (AHPs).
Neil Trautwein, manager of health-care policy for the U.S. Chamber of Commerce in Washington, DC, estimates AHPs will cut small businesses' insurance premiums by up to 50 percent. Why the big savings? Under the new bills, AHPs would not be held to the minimum benefit standards states typically impose on businesses, allowing companies to offer less coverage to employees. The federal government, not the states, would certify and regulate AHPs.
State insurance commissioners and the insurance industry, which clearly stand to lose if the bill passes, complain that the federal government would have a hard time assuring solvency of AHPs. In response, when the House Committee on Education and the Workforce passed the Fawell bill on June 12, it included an amendment that would require AHPs to charge a maximum 2 percent fee on each premium which could be used to bail out the AHP provider if it suddenly experienced financial problems. (S.729 currently contains no such provision.)
These groups are also concerned about a huge new insurance market they believe the federal government will not be able to police. In a recent letter, the National Governors' Association, the National Conference of State Legislatures and the National Association of Insurance Commissioners knocked the two bills, arguing that they "substitute critical state oversight with inadequate federal standards to protect consumers and prevent plan fraud and abuse."
Trautwein counters that the AHP bills require stop-loss, indemnity and other basic provisions that ensure the safety, as much as possible, of AHPs.
The Fawell bill passed committee, though by a narrow margin. At press time, S.729 had not been voted on in any stage, and H.R. 1515 was scheduled to be included in the omnibus budget reconciliation package, which includes tax cuts, Medicare changes and more. Although Clinton would prefer to see state--rather than federal--regulations regarding health insurance, it is unlikely he would veto the provision because of its congressional support as a new way to provide health insurance to children, one of the cause cÃ©lÃ¨bres of this Congress.
The emergence of inexpensive health plans offered by trade associations has the potential to shrink the number of uninsured employees like a stomach after a tummy tuck.
By Aida Alvarez, SBA Administrator
In June, the Small Business Administration took a step toward easing the government's hunt for small businesses seeking procurement opportunities with a new pilot program called Pro-Net. The Pro-Net database allows government agencies to tap into a large source of small businesses (6,500 during the pilot stage) to fill contracting needs--and allows small firms to find out what federal agencies are looking for. The new database should be of particular help to small, disadvantaged businesses that may not have other means of attracting government agencies' attention.
Pro-Net is not taking on any new businesses during the initial two-month pilot phase; once the program becomes permanent, however, all small businesses will be allowed to participate. For more information, go to the Pro-Net section of the SBA's Web site at http://www.sba.gov or call (800) 8-ASK-SBA.
Stephen Barlas is a freelance business reporter who covers the Washington beat for 15 magazines.