A national health insurance exchange proposed in Congress as part of a still-evolving health care reform program could bring relief to small businesses struggling to pay soaring premiums and to keep employees in group health plans and jobs, according to business groups and owners here and around the nation.
Yet some in the Westchester business community are divided on the merits and impact of a public insurance option for individuals and small employers shopping in an open marketplace for affordable health care.
Though the fog has not lifted over the final shape and scope of health reform legislation in Washington, D.C., Democratic leaders in both the House and Senate have made a national health insurance exchange a cornerstone of their proposals. Both Sen. Edward M. Kennedy”™s recently introduced bill, the Affordable Health Choice Act, and a joint draft proposal this month from three House of Representatives committees give states the option of developing a state or regional exchange in place of the national exchange.
In the details
Both the House and Senate proposals would make health insurance mandatory for all individuals ”“ with hardship exceptions granted in the House version ”“ and prevent insurers from denying coverage for pre-existing medical conditions. The Kennedy bill does not address two potential deal-breakers in negotiations with Republicans ”“ a public insurance plan that would compete with private insurers in the exchange market and mandatory employer health coverage for workers.
The House proposal includes the public insurance option for health-plan shoppers and requires employers either to provide coverage for employees or make contributions to an unspecified fund on behalf of their uninsured workers. As a protection to small businesses, it exempts small low-wage firms and gives a new small-business tax credit for companies providing health coverage.
Another Senate bill, the Small Business Health Options Program (SHOP) Act, provides a sliding scale of tax credits to companies employing up to 50 workers that pay at least 60 percent of the group health premium. Self-employed persons will receive an $1,800 tax credit or $3,600 for family coverage. The bill also reforms insurers”™ ratings to make annual premiums more stable and more affordable in small group markets.
Similar to the health exchange proposals, SHOP presents more private health plan options in a national purchasing pool and encourages statewide pools.
Even for those closely following the direction of health care reform in Washington, “It”™s moving so fast and furious that it”™s really tough to keep up with,” said David Rubenzahl, president of The Maxon Co. in Irvington, a third-party administrator of employee benefit plans. “Something definitely needs to be done” to change the current health insurance system, he added.
While all parties agree that universal coverage is needed, “Any universal coverage that gets signed by the president is going to raise the cost of doing business for small companies,” either through increased group premium costs or new business taxes to support individual coverage in a public plan, Rubenzahl said.
Calls for accountability
Hana Rubin, Maxon”™s chief operating officer, said while mandatory health coverage is needed, employers should not have to bear that added burden. “Small employers can”™t afford all this stuff,” she said. “You”™ll have more employers going out of business.”
Rubin said the health coverage mandate should apply to individuals. “There has to be an onus and it”™s got to be on the people,” she said. “I think there has to be a penalty for people if they”™re not going to maintain their health coverage. They have to feel it in their pocket.”
Both Maxon executives oppose a public health insurance option. “I think the government coming in and calling themselves an insurance carrier is very frightening,” Rubin said.
Rubenzahl said a public insurance system modeled on Medicare eventually will drive private insurers out of business. “Medicare can compete only because it sets prices” at artificially low levels for medical services, resulting in a large cost shift to private insurance plans. “We see higher bills because Medicare keeps reducing their fees for the doctors and the hospitals.”
A similar public plan with artificially low premiums will draw away the bulk of private insurers”™ business, he said.
“I think what”™s in the back of the mind of the liberal part of the Democratic Party is the single-payer system” for health care, Rubenzahl said. If a Medicare-like public insurance plan is offered in the market, “I think within 10 years there will be a single-payer system.”
At The Business Council of Westchester, Paul J. Vitale, vice president for government and community relations, said an insurance pool to create greater purchasing power for small businesses should be explored. In New York”™s small group market, “We”™d like to see more products available with less (state) mandates,” he said.
“We certainly want to preserve the private insurance system as we seek alternatives for greater access. I just think anything that forces anyone into a single-payer system is not going to serve business well.”
At the Westchester County Association, President William M. Mooney Jr. said a national health exchange could especially benefit companies here. “In New York state you don”™t have controls on premium rates rising,” he said. “If you were able to shop on a national basis rather than shopping in New York state, I think it would be a distinct advantage for the small-business guy.”
Regarding a public health insurance option, “Any kind of competition is good, whether it be public or private,” Mooney said. “If it opens up the door to better pricing for the business community, then it”™s good.”
The WCA chief, though, questioned how a public insurance program would be funded. “If you”™re moving money from the hospitals”™ pot to this pot, then I wouldn”™t be for it,” he said. “The hospitals are already hemorrhaging.”
