REALTOR® Magazine-Daily News-Myths Behind Small Business Health Plan Criticism

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Daily Real Estate News | May 3, 2006 | Myths Behind Small Business Health Plan Criticism Some 50,000 REALTORS® have sent members of Congress more than 100,000 letters in recent weeks urging passage of small business health plan legislation. More letters are in the works, because in a few weeks, the U.S. Senate will consider an NAR-backed bill to allow trade associations and groups of small employers to band together to negotiate affordable plans for their members. Given the importance of the vote, NAR is pulling out all the stops to win passage of the Health Insurance Marketplace Modernization and Affordability Act (S. 1955). Among other things, NAR is flying in a group of political leaders among its members — known as federal policy coordinators — to meet with influential senators and press for an end to the disparity that exists between markets for large and small group insurance plans. Thousands of new letters will flood Capitol Hill as well. As NAR President Thomas M. Stevens has said repeatedly, “independent contractors and employees at small companies have waited long enough to have the same access to good health insurance as their counterparts in large companies and labor unions.” Despite the huge effort by NAR and allied groups, such as the National Federation of Independent Businesses, the Senate vote will come down to the wire. That’s because powerful interests on the other side, like AARP and the American Cancer Society, are spurring their own activists into action. They fear a change to the insurance marketplace will negatively impact their members’ current coverage. “Contact your senators and ask them to vote ‘No’ on S. 1955,” AARP says in an appeal to its the 35 million members. Opponents aren’t just spurring on activists within their own ranks, either. In high-profile ads in major newspapers like The New York Times, AARP and other opponents contend the bill would lead to higher-priced coverage for their members. AARP says, “S. 1955 would have the unintended consequence of making health insurance less accessible and affordable for 50+ workers, individuals with preexisting conditions or chronic illnesses, and women of child bearing age.” What’s behind the concerns? The Myth of ‘Cherry Picking’ At the heart of the opposition is a fear that employees with the lowest health risks would flock to new plans created under the legislation. The new plans, since they wouldn’t have to meet state rules requiring coverage for a long list of conditions and procedures, could be more affordable than other plans and could attract healthier, often younger, workers who aren’t looking for a full-range of options such as coverage for diabetes treatment or chiropractic procedures. To groups like AARP, the migration of younger workers to these basic plans would force those who are older or who have chronic illnesses into far more expensive plans. One consequence of that could be decreased willingness among employers to hire or retain these workers because of their increased insurance expense. “There’s going to be winners and losers,” David Certner, AARP director of federal affairs, said in the May 1 issue of The Hill, a trade newspaper covering Congress. “Insurers [would be allowed] to charge small businesses as much as 50 percent more for premiums if some of their workers are in less-than-perfect-health,” says the American Chiropractic Association, which also opposes the bill. Currently, all employees in an employer’s plan — young, old, healthy, ill — are lumped into just the one plan, which must meet the state’s coverage requirements. Thus, risks and costs are spread among everyone. The Reality: Coverage Available For small employers, one of the key attractions to the NAR-backed bill is its standardization of the basic plan across all 50 states. Thanks to standardization, an association like NAR can create economies of scale by bringing hundreds of thousands of members from across the country to the table when it negotiates rates with an insurance provider. That puts far more power in its hands than if it had to negotiate 50 separate plans, each with far fewer members. “It’s one thing to negotiate when you have 1,200 members and another altogether when you have 150,000,” says an NAR analyst. Standardization eliminates the need to follow 50 different sets of rules and more than 1,800 different requirements. At the same time, however, employers would be required to make more specialized coverage available for workers who want it. “Small business health plans will be required to offer at least one plan option that complies with state law or is equivalent to the plans offered to state employees in the country’s five largest states,” says an NAR analyst. What’s more, federal coverage mandates—which include some of the same conditions as many state mandates—would apply, ensuring coverage for workers with cancer or certain other conditions, including pregnancy. The Right Solution Now To supporters, small business health plans offer a realistic solution that can be implemented today, making a sizable dent in the country’s growing insurance affordability problem. According to some estimates, several million Americans who currently go without health insurance could be helped tomorrow if small business health plans are allowed. With 46 million uninsured Americans today, that’s a modest but still solid impact that will cost the federal government nothing — and many of these newly insured will be REALTORS®. About 28 percent of REALTORS® today go without health insurance, largely because of high premium costs, and more will go without as sales slow and premium payments become more of a burden. “Like all self-employed and commission-based workers, REALTORS® have no employer who contributes to the cost of health insurance, no guaranteed monthly income, and significant monthly business expenses that continue even in the months when there’s no sale, and therefore, no income,” says Ed Lawler, a practitioner with RE/MAX Alliance in Fort Collins, Colo. Lawler testified for NAR at a health insurance hearing in the U.S. House of Representatives in late April. The House passed its version of small business health plans earlier this year. Its legislation, the Small Business Health Fairness Act (H.R. 525), is similar in key aspects to the bill set for consideration in the Senate. In one important difference, the House bill allows groups to negotiate plans with providers or self-insure. The Senate bill doesn’t allow self-insured plans. America’s Health Insurance Plans, a trade group, and some major insurance industry players, including the Blue Cross and Blue Shield association, which for years have lobbied against small business plans, have stayed on the sidelines of the debate over the Senate plan. It addresses some of their key concerns, in part by its approach to standardize state coverage mandates. But with powerful groups like AARP girding for battle, REALTORS® and others with a stake in the issue face a tough fight in the weeks ahead. To let your member of Congress know where you stand, go to the NAR Action Center. To learn more about this issue, visit the Small Business Health Plans page at REALTOR.org. — By Robert Freedman, REALTOR® Magazine Online