Democratic presidential and vice-presidential candidates John Kerry and John Edwards, if elected, plan to cut health care premiums up to $1,000, reimburse businesses 75 percent of the costs of employee-related catastrophic illnesses or injuries, cut insurance administrative costs about 25 percent, reduce malpractice costs by preventing frivolous lawsuits, improve the health care delivery system and allow tax credits to employers who pay at least 50 percent of their employees’ health insurance plans, according to johnkerry.com
But National Federation of Independent Business President Jack Faris doesn’t think the Kerry/Edwards plan is enough to alleviate the heath insurance burden on small businesses. The federation supports associated health plans as the most feasible pathway to affordable health insurance costs for small businesses, Faris said.
Associated health plans allow small business owners to band together across state lines to purchase health insurance plans for employees and their families through a membership in a professional or trade organization. The advantage is the same that corporations currently enjoy – greater volume equals greater purchasing power, which means lower insurance costs.
According to the NFIB plan, only bona fide trade or professional organizations that have existed for three years or more could sponsor an associated health plan. The plans would be exempt from state mandates and there would be no “cherry picking” of good-risk employees – coverage would not be subjected to an employee’s health status.
Under this concept, which, per the NFIB, has been supported by 170 nationwide organizations, associated health plans would be strictly regulated by the U.S. Department of Labor, which currently regulates 275,000 health plans covering 72 million people.
The NFIB reported that the Congressional Budget Office estimated health insurance premiums for small businesses would be reduced by 13 to 25 percent, if the business obtained insurance through associated health plans. That equals a $450-to-$1,250 savings per covered employee.
NFIB officials say a high percentage of employer costs are related to insurance administrative costs, and under an associated health plan, those costs would be significantly reduced.
Associated health plans were popular years ago; however, the NFIB reports that state regulations have made administering an association health plan a nightmare. In 1990, there were more than 1,000 associated health plans – today there are less than 200.
For the past seven out of eight years, Colorado has ranked in the Top-10 among the healthiest states in the country, according to the United Health Foundation. Yet, the high cost of health care has meant millions of lost dollars to U.S. employers. The National Committee for Quality Assurance reports 57,000 avoidable deaths per year, $41 million in sick days and more than $11 billion in lost productivity.
Both political parties are talking about health care costs, realizing the issue is crucial to the November election. On the Republican side, President Bush, in his 2004 State of the Union address, talked about his vision for health care: “On the critical issue of health care, our goal is to ensure that Americans can choose and afford private health care coverage that best fits their individual needs. To make insurance more affordable, Congress must act to address rapidly rising health care costs. Small businesses should be able to band together and negotiate for lower insurance rates, so they can cover more workers with health insurance. I urge you to pass association health plans.”