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Health Hearing Insures Little

As soon as Congress can decide how to provide health insurance for children, it should turn its concentration to assisting small-business employees and the self-employed get and keep medical coverage.

Most of the 47 million people without insurance are self-employed or work for small businesses. Moreover, those who have coverage pay a steep price. The average self-employed person pays $12,106 a year for family health coverage, according to the Kaiser Family Foundation.

The Senate Finance Committee held its first hearing yesterday on the vexing problem of health insurance coverage among small businesses.

Sen. Max Baucus, Montana Democrat and chairperson of the committee said, "We will help a big chunk of the uninsured, if we can figure out how to provide affordable insurance options to small-business employees. A bill that comes out of this committee should provide more insurance options to the self-employed. And it should also make sure that this insurance offers real coverage that is worth the money."

However, judging from yesterday's hearing, that legislation is years away. Many proposals to assist small-business employees share common elements that consist of a tax credit to help defray costs.

Another alternative discussed at the hearing engages pooling risk across state lines, an idea supported by the National Association of Realtors, a profession that is generally self-employed. However, Joel Ario, acting commissioner of the Insurance Commonwealth of Pennsylvania told members of the committee that idea would not work.

He said, "While the multistage pooling approach is untested, the experience of single-state purchasing pools created in the mid- and late -1990s suggests that adding more pooling options to the risk pooling that already exists in small group markets by virtue of state rate regulation may not add much value."

Mr. Ario said a more practical approach could be the inclusion of self-employed individuals in small group markets, health insurance plans for small businesses.

That seems to make some sense as a first step as in most states, sole proprietors should purchase coverage in the individual market, where people are vulnerable to higher premiums if they are unwell. Bringing them into small-business health plans would get them some coverage and increase more risk.

Mr. Ario brought up another attractive suggestion: waiving federal requirements, for instance certain provisions of ERISA. "It will be important to carefully consider the impact of any new federal reforms on the states' ability to be effective partners in solving our health care crisis," he said.

ERISA, which stands for the Employee Retirement Income Security Act, shields businesses from state and local regulation of the advantages they offer workers, together with health insurance. Without the law, national companies in particular could attain little consistency in their benefit plans. Courts in recent months have used ERISA to strike down laws in Maryland and Suffolk County, N.Y., that would have required employers to offer health insurance or pay into a government fund to subsidize coverage.

Mr. Ario's comment highlights a debatable issue.

Any move by the federal government to disrupt ERISA will end up in the courts and implode health care reform efforts by splintering business from a consensus required for real reform.



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