A crummy health bill’s better than nothing
Lawmakers have crossed the aisle in Congress to come up with a health care bill that won’t do a lot to alleviate the hell small businesses face when it comes to affording insurance, but at least it’s something.
Last week, House Small Business Committee Chairwoman Nydia M. Velázquez (D-NY) and Rep. Joe Pitts (R-PA) joined forces to introduce a bill called The Small Business CHOICE (Cooperative for Healthcare Options to Improve Coverage for Employees) Act that aims to help make healthcare more affordable for entrepreneurs.
The bill encourages small business cooperatives to pool their buying power and potentially get better rates, and it also provides some tax incentives.
Will the bill be enough? Probably not.
Legislators shared some gloomy statistics when they announced the new act. According to a press release from the U.S. House of Representatives’ Committee on Small Business:
“It is estimated that more than half of the 47 million people across the country who lack health insurance live in a household headed by a small business owner or employee. Over the course of the past year, small firms have seen healthcare costs rise by almost 15 percent. The number of companies offering coverage, meanwhile, has dropped by more than a quarter.”
Despite the harsh realities, Velázquez and Pitts think their proposal will make a difference.
“The Small Business CHOICE Act would keep small firms from having to choose between providing health coverage to their employees and keeping their doors open,” Velázquez said. “By giving entrepreneurs viable health care options, we are not just helping their businesses succeed. We are bringing coverage to the tens of millions of Americans who contribute to our economy, but find health insurance out of reach.”
So, how will this happen?
The new act calls for a refundable tax credit of 65 percent -- an extra 5 percent credit for firms that have not offered insurance before -- and it takes away some of the risk that insurance companies face when small firms buy into insurance cooperatives, thus opening up the door to more entrepreneurs who want to join those cooperatives.
That, at least, is how the legislators see it.
The buying pools, a key part of the legislation, make sense on the surface, but it’s unclear whether such cooperatives will actually work. Many experts I’ve interviewed in the past have said the only way to make these pools work well is if businesses are allowed to join forces with companies in other states to buy health coverage across state lines, something that’s currently prohibited.
I asked Duncan Neasham, the press person for the Committee on Small Business, if the CHOICE Act would eliminate this barrier.
Alas, the answer was no:
“Small businesses would not be able to cross state lines to purchase primary insurance coverage through cooperatives with businesses in other states,” he said. “The cooperative’s function is to provide excess claims coverage to its members, which is a form of reinsurance.”
Many business groups have come out in support of the CHOICE Act. This was one of the only dissenting voices I could find out there after it was unveiled, and it’s from a newspaper in Kansas (The Wichita Eagle):
Tim Witsman of the Wichita Independent Business Association said he believes tax credits are part of the solution, but he's not so sure the pooling concept works.
It’s a concept that’s been tried before and rates just don’t come down, he said.
“Health care costs for one kind of industry are different than for another,” he said. “Who usually ends up joining it? Those who have high costs and trouble joining elsewhere. It sounds good ... but these are the kinds of things that happen.”
Do you all think the act’s enough?
