Doyle Proposes Insurance Changes: He Looks to Revamp Health Coverage for Small Businesses
24 01 08 - 12:50
By Guy Boulton and Stacy Forster, Milwaukee Journal Sentinel
Jan. 24--Gov. Jim Doyle put forth on Wednesday a sweeping proposal that would remake the health insurance market for small businesses.
"Skyrocketing health care costs are paralyzing our economy," Doyle said in his annual "state of the state" address in Madison. "And across the country small businesses, their employees and their families are shouldering the worst of the problem."
The governor's proposal could lower the cost of providing health benefits for many businesses with older employees while raising the costs for those with younger employees.
It also could increase competition in the health insurance market for businesses with 50 or fewer employees. But it is almost certain to face opposition from insurance brokers and those who sell health insurance to small businesses.
The governor's proposals target a segment of the economy that often faces the highest costs for health insurance and that employs the largest concentration of uninsured workers.
Nationally, an estimated 42% of workers at companies with three to 24 employees were covered by an employer health plan, according to an annual survey by the Kaiser Family Foundation and the Health Research and Educational Trust, an affiliate of the American Hospital Association. The percentage increased to 51% for employers with 25 to 49 workers.
The proposals contains two key components.
First, the state would prohibit health insurers from charging small businesses higher rates based on their claims history. Under the existing system, the cost of health insurance -- particularly for the smaller employers -- can soar if an employee has a serious illness.
Ten states have some form of the proposed regulation, called community rating, according to the Kaiser Family Foundation.
Second, the state would set up a virtual marketplace in which employers with fewer than 50 employees could buy health insurance.
The state would solicit bids from insurers for plans that provide different tiers of coverage.
The market would set the price. But the competing plans in the tiers would provide similar coverage.
That would enable people to make apples-to-apples comparisons and could increase competition.
"Right now it is such a convoluted market," said Jason Helgerson, administrator of the state's Division of Health Care Financing. "Small businesses can't hire an HR director."
The virtual marketplace also would enable employers to contribute a set amount to an employee's health benefits and then allow him or her to pick a plan.
The marketplace, though, would create a new competitor for insurance sales people.
Michael Metz, a lobbyist for the Wisconsin Independent Businesses, had not seen the governor's proposal Wednesday evening but welcomed the governor's focus.
"We are willing to looking at any proposal that would lower the health insurance costs for small business," Metz said.
Most of the long-term uninsured work, and the largest concentration is among small employers.
"What the governor recognizes is small businesses have unique problems in the health care market," he said.
Phil Dougherty, senior executive officer for Wisconsin Association of Health Plans, also had not seen the details and would not comment on the proposal. But he said, "We commend him [Doyle] for focusing on the small group market and focusing on affordability."
The ideas underlying the proposals evolved from a grant to the state from the Robert Wood Johnson Foundation. The grant was to explore policy options to expand coverage.
The state also has hired as a consultant Jonathan Gruber, a well-known economist in health policy circles and a professor at the Massachusetts Institute of Technology.
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Source: The Milwaukee Journal Sentinel