New York Times Examines State, Federal Efforts To Expand Health Coverage to Small-Business Workers

Many states and Congress have begun to address "one of the biggest causes" of the rising number of uninsured U.S. residents: the growing number of small businesses that are unable to afford health insurance for their employees, the New York Times reports. At least 20 million of the 47 million uninsured U.S. residents are employed by small businesses or are self employed -- a figure that has increased on average by more than half a million annually since 2000, the Times reports. According to a survey by the Kaiser Family Foundation and Health Research and Educational Trust, 59% of businesses with fewer than 200 employees offered health insurance in 2007, compared with 66% in 2002. Less than 50% of businesses with fewer than 10 employees offered coverage last year, according to the survey.

Jon Gabel, a health policy researcher at the National Opinion Research Center at the University of Chicago, said the cost of insurance tends to be a bigger burden for smaller businesses, adding that small firms pay an estimated 18% more than large companies for the same insurance. In addition, because small employers cannot spread the costs and risks of an individual's high medical bills over a large work force, they often must choose coverage with fewer benefits that can leave workers with substantial out-of-pocket costs, the Times reports.

According to the Times, states are "taking a variety of approaches" to address the problem. Some states such as Arizona are extending tax credits to small businesses that offer health coverage to workers as a way to "help ease the burden of insurance premiums" that have almost doubled since 2000, the Times reports. In addition, states including New Mexico and Montana are considering allowing small companies to form purchasing pools to give them the same leverage as large companies. Connecticut was among the first of the states to pass laws intended to limit large annual premium rate increases, and New Hampshire in 2006 began prohibiting insurers from using the health of a company's employees to set premiums.

Michelle Dimarob, manager of legislative affairs for the National Federation of Independent Business, said, "States are being aggressive experimenters, and those lessons learned are going to be invaluable to us in looking at national health reform."

On the national level, a Senate bill introduced in April would prevent insurers from basing their premiums on the health status of employees and offer tax credits to small businesses that provide coverage. The measure also would allow small companies to create purchasing pools across state lines and give states the ability to regulate the insurance plans offered through pools to avoid abuse. A similar bill was introduced in the House this month. Despite bipartisan support, it is uncertain whether the legislation will be passed in an election year, but proponents say that the legislation would be reintroduced next term (Abelson, New York Times, 7/10).