HR6210 was introduced in the House this week by a bipartisan group of representatives. The bill would allow small group employers to join with other small groups to form statewide or nationwide pools in order to obtain health insurance as a larger group. The bill would also allow for tax credits of up to $1000 per employee or $2000 per family if the employer pays at least 60% of the premiums.
This will undoubtedly help small groups to some extent. Renewal premium increases do tend to be higher for small groups than for larger ones. In a larger group, the cost of a high-dollar claim will be much more diluted by the size of the group than it would be in a group of 10 or 20 employees. But it’s not a magic bullet. Group health insurance premiums – including small and large groups – last year averaged over $12,000 per family, and nearly $4,500 for a single employee. Getting health insurance as a large group is not going to create as much of a drop in premiums as many small business owners would like. The fact is, health insurance is expensive. Any group policy – whether large or small – is required to cover all eligible employees, regardless of prior medical history (insurers are required to accept all small groups that apply, whereas they can decline coverage to a large group. But if they accept any group, they have to accept all eligible employees within that group). In order to be able to provide coverage to all employees, regardless of their health situation, group health insurance is expensive. Getting coverage as a large group will cushion the renewal premium increases for a small employer if one of their employees develops a serious illness, but paying for health insurance is still going to be a stretch for a lot of small businesses. If health insurance for an employee and family costs $12,000 per year, and the employer gets a $2000 tax credit in trade for paying 60% of the premiums, the employer is still out-of-pocket over $5000 for that employee’s coverage. That’s a significant cost, especially for a small business that has to work to keep expenses to a minimum. We frequently get calls from employers here in Colorado who have three or four employees and would like to offer health insurance. But when they find out that the premiums are going to be a few thousand dollars a month, they realize that there is no way they can fit health insurance into their budget. Pooling together with other small businesses will help, but not to the extent that all employers will be able to afford to offer coverage to their employees. Even large employers, who have historically paid all of the premiums for their workers’ health insurance, are struggling with the cost of insurance. More and more of them are shifting increasing costs onto their employees by deducting larger amounts from paychecks to cover premiums.
In order to significantly impact health insurance premiums, we need to start at the root of the problem. We need to address the problems created by a profit-driven health care system. Our hospitals, pharmaceutical companies, medical suppliers, and health insurance carriers are mostly for-profit entities, which is detrimental to the consumer – and to whomever ends up paying for their health insurance. Only when we bring the cost of health care into line with what other developed countries pay, will we see a significant reduction in the price of health insurance. Allowing small groups to band together to buy health insurance will help a little, but it’s like putting a Band-Aid on a jugular wound.
