SMALL BUSINESS: Can Purchasing Groups Expand Access?
Small business purchasing cooperatives, such as Health Marts and Association Health Plans, while they "might reduce somewhat the erosion of health insurance coverage in the U.S.," are ineffective in reducing health costs for small employers and therefore "will not by themselves solve the problem of the uninsured," according to a new report by the National Coalition on Health Care ("Small Employer Health Insurance Purchasing Arrangements: Can They Expand Coverage?", Executive Summary, May 1999). The cooperatives would allow small business owners to purchase employee health insurance through local administrative bodies or associations like trade groups, in theory creating economies of scale that would let insurers spread risk across a greater number of employees and thereby enable them to offer health insurance at lower prices (NCHC release, 5/10). But the report, authored by Jack Meyer and Elliot Wicks of New Directions for Policy, says neither Health Marts nor Association Health Plans "are likely to reduce health costs enough to significantly entice most small firms not now offering coverage to buy health insurance" (Executive Summary, May 1999).
Making it Worse?
The authors argue further that the group strategies may even undermine federal and state reforms enacted in the last decade that have created a more equitable market for small business. The proposed legislation could dilute the effects of these laws by permitting small businesses with low-risk employees to group together, leaving those with higher-risk employees to pay higher premiums. In the words of NCHC President Dr. Henry Simmons, "The proposals out there now to help small businesses could well take us backwards if they allow some small businesses to gain an advantage over others" (release, 5/10). Nevertheless, Meyer and Wicks note that "health insurance purchasing arrangements are an idea still worth pursuing. They have the potential to be an element of a more comprehensive plan to expand health insurance coverage over time" (Executive Summary, May 1999).