Senate OKs health-care bill for businesses
19 03 08 - 12:07
Plan would tighten control over program for small businesses
Amanda J. Crawford
The Arizona Republic
Mar. 19, 2008 12:00 AM
A bill aimed at saving a beleaguered state health-insurance program for small businesses passed the Senate on Tuesday.
The bipartisan proposal would tighten financial controls over Healthcare Group, which insures nearly 23,000 self-employed Arizonans or small-business employees, while opening up the program to new members. Sole proprietors would no longer be eligible to join, but a controversial requirement that businesses be uninsured for six months before joining would be dropped. Enrollment growth of employer groups would be capped at 10 percent a year.
Sen. Ken Cheuvront, a Phoenix Democrat who co-sponsored the proposal, said the changes can stop the losses the program has been grappling with while preserving it for small businesses struggling to afford health insurance for their employees.
"We have to be mindful that we would like to have people have health-insurance coverage rather than not have coverage at all," said Cheuvront, a small-business owner himself. "This is a bill to help businesses that are trying to do the right thing and provide insurance to their employees."
The bill is opposed by private health-insurance companies, which have long argued that Healthcare Group is government-sponsored competition. Some lawmakers say the Senate plan doesn't go far enough to fix Healthcare Group's financial travails.
"I don't think there is anything in there that will secure the long-term sustainability of the program financially," said Rep. Kirk Adams, R-Mesa. Adams has proposed a competing plan in the House, which would create a high-risk pool for people with significant health problems and new tax incentives for small businesses to provide private insurance to employees.
The group's roots
Healthcare Group was created in 1985 to help small businesses, self-employed individuals and political subdivisions struggling to afford insurance on the private market. The state subsidized the program until two years ago when the subsidies were cut off in a bid to expand Healthcare Group's reach. The plan: Expand Healthcare Group to cover a mix of healthy and sick participants so that it could be self-sustaining through premiums.
But instead of becoming self-sufficient, the growth only increased costs.
At the end of the last fiscal year, the program faced a deficit of more than $20 million.
In response, lawmakers froze enrollment in the program last year and appropriated $8 million to help close the deficit. Healthcare Group administrators raised premiums and reduced administrative costs.
Rainey Daye Holloway, spokeswoman for the Arizona Health Care Cost Containment System, which manages Healthcare Group, said that deficit has been reduced to $2 million.
The Senate proposal would tighten financial oversight by requiring regular financial reporting and actuarial oversight.
Cheuvront called it "criminal" to force employers trying to do the right thing and provide insurance for their employees to go uninsured for six months before joining.
But opponents say the requirement ensured that Healthcare Group focused on the uninsured.
"It moves Healthcare Group away from its mission of insuring uninsured employers," said Don Hughes, a lobbyist representing the industry group, America's Health Insurance Plans.
Hughes and Adams also said financial changes don't go far enough to push the program to financial sustainability or to ensure hospitals are adequately reimbursed.