Chamber survey outlines care affordability problem

by Jan K. Allen

SBJ Contributing Writer

The cost of health care has been a major issue for businesses big and small. Costs continue to rise, and the rising cost of treatment is only one factor. A number of federal and state regulations have also boosted administrative costs, according to Kate Sullivan, health policy manager for the U.S. Chamber of Commerce.

"It's time that government made it easier for small businesses to provide health care coverage for their workers, instead of throwing up road blocks," Sullivan said. "If we don't do something now, then health care coverage will be out of reach for more American workers."

The U.S. Chamber of Commerce is the world's largest business federation, representing more than 3 million American businesses and organizations.

In a recent survey of its membership the chamber found that, out of 251 small businesses polled, 73 percent offer health care benefits to their employees. Of this percentage 79 percent reported premium increases in the past year, with a whopping 19 percent average increase overall.

In the survey, employers who said they were not currently offering health benefits indicated they would offer them if they were more affordable. Among employers who had a health plan in force, 57 percent passed some or all of the recent increases along to employees, and 10 percent discontinued coverage altogether.

A number of things taking place in Washington have created the problem and the mandates set forth tend to trickle down to the state level, adding more regulations and making matters worse, according to Andrea Hofelich, manager of media relations at the U.S. chamber.

Hearings began in April for a new bill, sponsored by U.S. Rep. Jim Talent, R-Missouri, which could help alleviate some of the pressure, Hofelich said.

The Small Business Access and Choice of Entrepreneurs Act would make it easier and cheaper for employers to provide health care coverage, according to a bulletin put out by the chamber.

Opposed by the Blue Cross Association, this bill would allow the small business to buy coverage through a risk pool, which would increase its bargaining power, Sullivan said.

The mandate would be governed under federal law, with limited supervisory intervention, and bypass state restrictions, except for the state insurance commission's role involving solvency of the insurance providers, thus reducing some of the red tape, she said.

The chamber stated that bill would give strength to small businesses to negotiate cheaper packages, driving prices down through competition. It would help insurance providers in reduction of administrative costs and would spread the medical risk over a larger group, allowing the insurance companies to offer lower cost premiums for the plans.

Thus far, in the opinion of the U.S. chamber, the Clinton administration has not been going in the right direction on health care issues, Sullivan said. Despite the robust economy and low unemployment rate, the number of uninsured individuals continues to rise. Cost of coverage is the major factor.

Local health insurance agent Larry Bowen, owner of Bowen and Company, said he has not seen any businesses he services drop insurance coverage altogether, but many have either changed plans or transferred more of the premium burden to their employees.

Some employers who once paid 100 percent of the individual employee premium have opted to pass a portion of the cost along to the employee.

Many business owners initiating new plans are paying the minimum necessary to implement the plan and letting employees pick up as much as the law allows. With most plans, the employer's minimum contribution can be as little as 50 percent or as much as 75 percent, Bower said.

Government regulation has helped protect some workers from losing coverage due to existing health conditions, but the end result can still be higher costs to the individual and the employer. Bower cited the Health Insurance Portability Act as one example.

The act allows an employer with two or more employees to move from one provider to another regardless of any pre-existing health conditions, however, the insurance companies have the right to review the package and adjust the rate accordingly on a per case basis.

While the act has made it easier for a high-risk employee to retain coverage, it's more costly to the employer, Bowen said.

The result of many such well-meaning government mandates is that instead of make things easier and reducing costs, they have the opposite effect.

"This is pretty much typical of government intervention," Bowen said.

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