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Healing Hands

How some states are easing the health-insurance burden

Providing employees with health coverage is a struggle for Carrie Howard, co-owner of DJ's Industrial Rubber Products, a six-employee Oklahoma City company that sells fire-hose fittings. Even with 2005 sales at $1 million, the company can't afford to cover its employees. Howard says, "If they could have a $20 co-pay, or any help with prescriptions, they would do it."

Howard, 42, and the company's employees could get help very soon from the state government. In November, Oklahoma started Oklahoma Employer/Employee Partnership for Insurance Coverage, a voter-approved statewide health insurance program for companies with fewer than 25 employees. Funded largely through a tobacco tax increase, the state picks up 60 percent of an employee's premium, the employer pays 25 percent, and the employee pays the remaining 15 percent.

The program will help Oklahoma's small employers provide benefits and reduce the number of Oklahoma's uninsured--currently 600,000. Within the first few weeks of the program, 206 companies had submitted applications, and its mailing list has ballooned to 4,500 subscribers. "We've had a ton of phone calls," says Matt Lucas, project director for the Oklahoma Health Care Authority, which is administering the employer/employee partnership. "It's a fairly innovative program."

Oklahoma isn't alone. An October 2005 study by the Kaiser Family Foundation on Medicaid and the Uninsured found 20 states have increased access to health-care options. Illinois' new All Kids plan will provide affordable health-care coverage to uninsured children of working parents. The Massachusetts legislature, meanwhile, is debating whether to require residents to carry health-care coverage via an employer, the government or a self-funded policy, with low-income individuals qualifying for a subsidy, and potential tax breaks for employers who provide health insurance.

"States are all over the map in terms of what they're doing," says John E. McDonough, executive director of Health Care For All, a Boston group advocating accessible and affordable health care for all Massachusetts residents. "Some states are looking at creative ways to help small employers."

State budgets are moving back into the black, and that's allowing them to pump money into once-dormant initiatives. In 2005, 45 states exceeded budget projections, and the other five met their targets, according to a recent report on states' fiscal health by the National Association of State Budget Officers. Compare this to 2003, when 37 states slashed spending halfway through their annual budget cycles.

"I don't think [states'] interest in this issue ever went away," says Alan R. Weil, executive director of the National Academy for State Health Policy, a Portland, Maine, nonprofit that analyzes state health-care policy and practices, "but a sense of not having the resources to do anything about it [put progress] on hold."

Entrepreneurs struggling to pay for employee health coverage have some new options, but they have to stay realistic: "The resources available to help small businesses afford health coverage are limited," Weil says. "But there are enough states trying to figure out how to extend some help to small businesses that it's a good idea to [look into] what's happening." Your state's insurance department is one place to start.

Paying attention paid off for Howard: She signed up for Oklahoma's new program the day it started taking applications. "I read [about] it in the paper a long time ago and just tried to keep up on it," she says. At press time, Howard was preparing to give employees insurance applications to fill out.

States still face their share of budgetary challenges; many states are in debt from borrowing heavily during the downturn. And demand for Medicaid continues to increase. The big question is how long politicians will leave it to states to triage a nationwide health-care crisis. "The only effective long-term solution will be national," says McDonough. "And it's not a real issue on the Washington, DC, radar at this point."

Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the March 2006 print edition of Entrepreneur with the headline: Healing Hands.

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