June 28, 2005
Health Plans would help small business expand coverage for workers
- By permitting small businesses to purchase insurance through association
health plans, the Commonwealth could reduce the number of uninsured
persons by almost 25,000 and get more than 4,000 firms to offer insurance
to their employees.
the high cost of health insurance and other challenges facing small
businesses, a number of states, including Washington, California and
Connecticut, permit small businesses to form purchasing pools. However,
Massachusetts currently prohibits the formation of purchasing pools.
As a result, small firms may pay on average 13% more than large firms
for health insurance. By permitting small firms to join an AHP, the
state would help close this gap and expand health care coverage.
a model built by its staff economists, BHI found that AHPs in the Bay
coverage to an estimated 10,258 firms, of which 4,273 did not previously
coverage to 83,575 enrollees, of which 24,822 were previously uninsured
workers and their dependents;
the number of uninsured small business employees by 14,687; and
the burden of uncompensated care by $47.6 million.
assumes that current regulations regarding community rating and mandated
benefits would remain intact. Large businesses that self-insure are
currently exempt from these regulations and if the AHP were allowed
to be exempt the savings to small employers would be larger, more small
business' employees would be insured and the reduction in the burden
of the uncompensated care pool would be greater. The plan calls for
a centrally administered purchasing pool that would negotiate premiums
and that would administer plans for all participating small businesses.
Small businesses that join the AHP would see other benefits.
bargaining power may help keep premiums down and provide more price
stability year-to-year. It would also provide greater choices and improve
the state's "health capital" through increased productivity
and a healthier work force by an amount ranging from $44.4 million to
60% of the state's uninsured workers work for small business,"
notes John Barrett Director of Research at BHI. "By permitting
small business to pool risk in the same manner as big business is permitted
to do, the legalization of AHPs would level the playing field and make
a significant step toward reducing the number of uninsured as well as
the burden on the state's uncompensated care pool." The study is
available at http://www.beaconhill.org.
6/28/05 9:39 AM