Association Health Plans hold the answer for small business

Is it time for Association Health Plans? GLOBE: Relief in state health plan sought

President Obama’s vision for overhauling the nation’s health care looks remarkably like the landmark plan Massachusetts launched three years ago, but in one striking difference he would exempt many small businesses from having to contribute to workers’ insurance coverage.

For those small businesses that do provide insurance, Obama’s plan would offer tax credits to offset costs and would create an exchange where employers could buy coverage at competitive prices - two key things Massachusetts has not done.

The differences underscore a sore spot for many small business owners in Massachusetts, who have been lobbying for relief under the state’s law, saying insurance has become unaffordable.

Obama said in his speech to the nation Wednesday night that his overhaul would exempt 95 percent of small businesses - those with fewer than 50 workers - from having to pay for workers’ health insurance.

But in Massachusetts’ overhaul, businesses with the equivalent of 11 or more full-time workers must offer coverage or pay a penalty - a requirement that has chafed at many small business owners who say they lack the buying clout of big businesses to bargain for cheaper insurance rates. Small business owners say they have had to shoulder double digit annual increases in their premiums in recent years, typically higher than the 7 percent to 9 percent increases larger businesses have faced.

A 1996 state law prohibits small businesses from negotiating as a group.

Yesterday, Governor Deval Patrick said publicly for the first time that he backs efforts to change that law.

“That [law] is wrong in my view, and it needs to be changed,’’ Patrick said in a conference call with reporters.

Pending legislation would allow businesses with 50 or fewer employees to form a nonprofit consortium to bargain for cheaper rates.

Back in 2005, the institute release a study highlighting the benefits of allowing small businesses to develop association health plans.

It found that

- a small group purchasing pool has the potential to: provide coverage to an estimated 10,258 firms, of which 4,273 did not previously offer insurance;

- extend coverage to 83,575 enrollees, of which 24,822 were previously uninsured workers and their dependents;
reduce the number of uninsured workers by 14,687, and

- reduce the burden of uncompensated care by $47.6 million

However, such plans were met (and will continue to be met) with resistance from large insurance companies in the Bay State.

Press release June 28, 2005

Here is the full study.