Finance and Credit Professional

A 2006 survey, released by the health insurance trade group America's Health Insurance Plans (AHIP), offers a snapshot look at small group health insurance plans throughout Texas and nationwide. The survey has once again stirred up debates over whether health insurance is affordable enough to allow small businesses to cover their workers, or if sweeping changes are needed.

The survey showed that small businesses - those companies with 50 employees or fewer - actually paid a slightly lower health-plan premium than that reflected in a previous survey of mostly larger companies.

"The take-home message is that small businesses have affordable options," said AHIP President and CEO Karen Ignagni. "This is the only survey of its type on very, very, small businesses," she said. "The 'less coverage' hypothesis for small businesses is not what the data show."

The AHIP survey specifically reports that more than 650,000 small companies showed they paid an average monthly premium of $311 for individual members, and $814 for a family ("family" generally meaning a family of four).

AHIP officials also noted that the monthly premium for individual members is down from the $335 average premium revealed in an earlier survey done by the Kaiser Family Foundation, which focused on firms with three or more workers. The premium decrease, AHIP officials said, was due to cost sharing, which tends to be more significant in small-business health plans, compared with those of large firms.

The AHIP survey - which divided the small companies into those with 10 or fewer workers, 11 to 25 employees and 26 to 50 worker - also revealed that premiums dropped slightly as company size increased.

But the survey's portrait of a robust small-business insurance market is misleading. The health insurance industry could do even better by its mom-and-pop customers if legal barriers weren't standing in the way, Ignagni added.

According to the survey, small businesses state they want more affordability. "And we want to customize benefits for small businesses but we're prevented from doing that by state mandates," she said. "We could be doing more."

But not everyone agrees with the survey's findings. Todd McCracken, president of the National Small Business Association (NSBA), was skeptical about the AHIP survey and its conclusion about small companies' access to health coverage for their workers." We certainly don't think health insurance is affordable for small business," he said. "AHIP is trying to make a case that it's more affordable than people think."

McCracken stated that small-scale companies face unique challenges in covering their staff, such as higher health-plan administrative costs and less stable premiums. Oftentimes, one change in a tiny workforce - like the replacement of a young, healthy worker with an older, less healthy one - can keep premiums in a constant state of flux. With this kind of change "more than half of small businesses can't afford health insurance," he said.

The NSBA currently represents about 65,000 companies with an average workforce of thirteen employees. McCracken reiterated that lower premiums for small firms evidenced in the AHIP poll reflect the fact that smaller companies are increasingly making their workers pay more for health benefits, whether in the form of higher premium contributions or bigger deductibles and co-pays.

There is also the question whether the survey might be leaving out some of the states in which the market is dominated by (non-AHIP) Blue Cross & Blue Shield Plans, where tighter rating rules drive premiums higher.

McCracken said his group would support legislation that changed the current premium-based state tax laws - which don't affect self-insured companies or those that don't buy health insurance - into a more "broad-based" tax, such as an income or sales tax. But aside from piecemeal laws to cure the problem of affordability, "We're continuing to urge Congress to look at the bigger picture," he said. And how should that big picture look? "We would support something similar to the law recently passed in Massachusetts, where everyone has to have health insurance," McCracken.

About The Author :

Pat Carpenter writes for Precedent Insurance Company. Precedent puts a new spin on health insurance. Learn more at Precedent.com

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