By Jim Talent

In the 1960s, Washington made a collective and consensus decision to provide government sponsored healthcare for the most needy Americans, while most others got health insurance through an employer-based healthcare system.  Most Americans think that basic framework has worked reasonably well. 

In fact, a recent Rasmussen report found that 68% of American voters have health-insurance coverage they rate good or excellent …”  As the town hall meetings of August raged, Rasmussen found that “most of voters approach the health-care reform debate fearing that they have more to lose than to gain.”  In short, while we all want health care reform, the government should be careful not to undermine the coverage that is currently available.

Unfortunately, the proposals currently under consideration in the House and Senate do put the government deeply into the business of regulating what have previously been private decisions about health coverage.  The sponsors of those proposals often claim that the only alternative is inaction. 

But that simply isn’t true.  In the 1990’s, the House of Representatives repeatedly passed a bill I sponsored that would have provided coverage to millions of uninsured people without interfering with existing health care plans  This bipartisan legislation brought reform to our healthcare system without creating a new public program, and in fact without costing the government anything. First, some background about the problem.

Of the approximately 44 million uninsured people, well over half are people who work in small businesses.  Because small businesses by definition have only a few employees they want to ensure, they are at an inherent disadvantage in the insurance market, which means the cost of insurance tends to price them out of the market.  Here is what the President’s Council of Economic Advisers found in July:

The U.S. health care system imposes a heavy “tax” on small businesses and their employees. Due to high broker fees, fixed administrative costs, and adverse selection, small businesses pay up to 18 percent more per worker than large firms for the same health insurance policy. Some of these higher costs are passed on to small firm employees in the form of lower wages, and some eat into the profits of small businesses that could otherwise be used for research and development and for much-needed investments.”

What’s the answer?  Simply change the law to allow small businesses to pool together and buy health insurance through their trade or professional associations.  The new pools would be called Association Health Plans. 

Here is an example of what I mean.  Let’s take a typical small business that doesn’t provide health insurance:  a small family owned restaurant.  The owner would like to buy health insurance for his employees — for one thing, then he and his family could get insurance through the business –  but it’s expensive, time consuming, and intimidating for him to have to deal with insurance brokers and companies.  But suppose the National Restaurant Association could negotiate with the big insurance companies on behalf of all its members.  Then our hypothetical owner could join the national association, and he and his employees would automatically become part of a national pool with tens of thousands of members, just like large businesses. 

No more problems with insurance companies denying a small restaurant coverage because one of its employees has a history of illness.  No more high administrative or brokerage fees.  And the cost of insurance for small business would drop by a minimum of ten to twenty percent because of the competitive advantages of being part of a large national pool. 

Restaurants, farmers, small manufacturers, professionals in private practice with small firms – all of them could have access to Association Health Plans, which would quickly become a powerful new competitive force in the private market that would keep the big insurance companies honest.  The number of uninsured would drop by millions; millions of other small business employees would get better and cheaper coverage than they now have; the new competition would slow the growth rate of health care costs in general, and here’s the best thing:  it wouldn’t cost the taxpayer a dime.

Association Health Plans aren’t a government program.  They wouldn’t affect Medicare or the VA, and they wouldn’t require anyone to do anything.  They are an entirely voluntary way of empowering small businesses to buy health insurance as part of national pools, just as multinational companies already do. 

Why shouldn’t small business have the same opportunity to buy health insurance as big business?  And why do our leaders in Washington assume that small business people won’t want to purchase health insurance if they can get a fair price on the market?

When I served in the House of Representatives during the 1990’s, we passed Association Health Plans a number of times by large, bipartisan majorities.  When I was elected to the Senate, I managed to get a version of AHPs on the Senate floor – where it was filibustered to death by many of the same people calling so loudly now for health care reform.

I’ll ask the same questions now that I asked then.  What’s the worst that happens if Congress passes Association Health Plans?  That not as many people will buy them as we think?  So what?  Why doesn’t Congress at least try having some faith in our small businesses and empowering them to help themselves, before creating gigantic new bureaucracies, spending another trillion dollars of our money and turning health care in America topsy turvy?

This entry was posted on Saturday, October 17th, 2009 at 2:39 pm and is filed under Newsroom. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.