BUSINESSWEEK ONLINE : JULY 10, 2000 ISSUE
FRONTIER -- FEATURES Commentary: Search for a Cure There's no panacea, but government can act now to make health care more affordable Small business may be more affected by the health-care crisis than any other sector of economy, but it can't solve--or even ease--its problems without some government action. The fact is, some current laws actually make the situation worse by banning groups from bargaining for better rates. Other ostensibly helpful laws are either flawed or due to expire. So what should be done? There's no shortage of proposals knocking around in Congress, the states and the Presidential campaigns. While none will solve the problem alone, each could help ease the burden. Clear the way for the growth of Association Health Plans. Small businesses need to have new ways to band together to buy insurance. Right now, groups such as the U.S. Chamber of Commerce are blocked by state regulation from using their leverage on a national scale to bring down premiums through bulk buying for their members. Plus, the insurance they provide must be tailored to the requirements of each state--ranging from mandatory chiropractic coverage to dental and eyeglass plans. While mandated coverage of mental health or bone-marrow transplants may help some employees, it's a bad trade-off if it means many companies decide they can't afford to provide basic coverage. Putting these plans under federal law would give small-business associations the same rights as labor unions and large corporations to offer coverage nationwide, notes John G. Emling, a lobbyist for the National Federation of Independent Business. The idea is gaining traction. The U.S. House of Representatives has authorized national association plans, and negotiators for the House and the Senate are trying to reconcile differing versions of the Patients' Bill of Rights. Vice-President Al Gore and Gov. George W. Bush differ on the plans. Gore would accept purchasing cooperatives, but insists on upholding state mandates. Bush would tolerate scrapping most of them as a trade-off for the national buying clout. And yet associations are no cure-all. For one, the Congressional Budget Office figures that relatively few currently uninsured people--maybe as few as 330,000--stand to gain coverage under current proposals. The CBO in a January report argues that interstate associations would chiefly help businesses that already carry pricey conventional coverage. It cautions that many firms now uncovered will still find costs onerous. Give a tax credit to small employers who join purchasing groups. To really make association plans blossom, the federal government must weigh in--mainly with cash. Gore's plan for a 25% tax credit on the premiums for each worker would help. Certainly, such credits would be more palatable than outright subsidies, and they might just tip the balance for companies on the fence about covering their staffers. Keep Medical Savings Accounts. Republicans--and some Democrats--want to retain the program (Page F20), which is set to expire next year, and it's part of both the House and Senate's Patients' Bill of Rights. Some technical problems have made MSAs--a form of self-insurance for individuals--less attractive than they should be. MSAs should be made permanent and more accessible. Encourage experimentation in the states. With Washington in a quagmire, some states have taken up the challenge, and more should follow their lead. For instance, Kansas legislators this spring approved a statewide insurance-purchasing alliance for businesses of 50 employees or less. Lawmakers expect to help fund the effort through some $2.3 billion the state will get from tobacco-makers to settle recent court action. ''We believe you can't do it without a subsidy for low-wage workers,'' says State Senator Sandy Praeger, a Republican who notes that the issue crosses party lines. But federal action is still needed. Lawmakers should liberalize the rules for associations and use tax breaks to make them more appealing to small biz. And they need to chip away at the problem, with smaller reforms, such as letting workers carry over the balance in flexible savings accounts from one year to the next. Such innovations at least would tackle parts of the problem. And for now, that may be all that can be done. By JOE WEBER Weber covers health care for Business Week. _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS The Health Care Crisis CHART: Ouch! The Nation's Smallest Companies Faced the Biggest Hikes in Health Care Premiums TABLE: Remedy #1: Medical Savings Accounts TABLE: Remedy #2: Self-Funding with Stop-Loss TABLE: Remedy #3: Split Funding TABLE: Remedy #4: Association Health Plans TABLE: Remedy #5: Consumer Choice Health Purchasing Group CHART: Who's Covered Commentary: Search for a Cure INTERACT E-Mail to Business Week Online

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