Senate fight over small-business health care

Supporters say a bill that would allow pooling will help small-business owners get health insurance; critics claim it will drive up costs.

By Jessica Dickler, staff writer

NEW YORK ( -- As Congress gets set to readdress a small-business health care bill, proponents and critics begin to sharpen their swords.

Last year, Health, Education, Labor and Pensions ranking member Senator Michael Enzi unsuccessfully sponsored a small-business health bill, which would allow businesses to band together to purchase health insurance for employees.


Under the legislation, small-business owners can pool together to diffuse the risk and lower the cost of a health plan.

But the bill faces stiff competition from the State Association of Attorneys General, the American Cancer Society and the American Diabetes Association, who fear that employees will be left with scaled-down coverage and big bills.

Enzi has pledged to reintroduce a small-business health care bill this year before the 110th Congress. "He very clearly does intend to bring the bill up again sometime this year," said Craig Orfield of the Senate Health, Education, Labor and Pensions Committee.

Senate Finance Chairman Max Baucus recently said he wants to address small-business issues in the Finance Committee this year, including pooling arrangements that would expand affordable health coverage.

"Purchasing pools would bring together large numbers of small purchasers, both individuals and small businesses, and allow them to take advantage of group rates for coverage," Baucus said.

"The benefits of pooling in the health insurance arena are clear," said Amanda Austin, the National Federation of Independent Business's manager of legislative affairs for the Senate.

"The cost of health insurance depends on the number of people in the insurance pool who can share the risk if any one participant gets sick. Allowing small businesses to pool together across state lines increases the number of participants in the insurance group which spreads the risk and lowers overall costs.

"Additionally, pooling allows for greater administrative efficiencies and will expand the number of health care options available to small businesses. Big corporations and labor unions are permitted to pool together across state lines; it's only fair that small businesses are afforded this same opportunity," Austin said.

Lower risk, less coverage

The legislation will also allow small businesses to offer coverage that varies from state requirements, which could result in a bare-bones policy, according to Paul Fronstin, director of the health research and education program at the Employee Benefit Research Institute (EBRI) in Washington, D.C.

Because business owners would be able to provide health plans to their employees with coverage that is not as comprehensive as individual states mandate, some medical ailments, such as diabetes or breast cancer, might not be covered.

Critics fear such a bill will undermine the insurance market and drive up costs for services not covered under a policy.

In a letter to the Senate, a group of 41 state attorneys general said they opposed a Senate bill that could "erode state oversight of health insurance plans and eliminate consumer protections."

The attorneys general said the bill could result in "reduced care and ever-increasing out-of-pocket expenses."

In order to get passed through both chambers Congress, the small-business health care bill will most likely have to respond to the concerns about substandard coverage by the attorneys generals and other groups including AARP, the American Cancer Society and the American Diabetes Association.

In the end, "if Congress can come up with a compromise, it would be hard for the President not to sign it," Fronstin said.

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