Legislation paving the way for groups of small businesses to purchase insurance coverage for their employees won the approval of a key Senate committee on March 15 in a narrow 11 to 9 vote.
Senate Bill 1955, also known as the Health Insurance Marketplace Modernization and Affordability Act, was introduced by Sen. Michael Enzi, R-Wyo., the chairman of the Senate Health Education Labor and Pensions Committee. It also was sponsored by Sens. Ben Nelson, D-Neb., and Conrad Burns, R-Mont.
At the committee hearing to vote on the bill, Sen. Enzi said the legislation would enable more small businesses to afford insurance coverage for their employees by banding together through associations. While he typically does not believe in imposing mandates on private industry, Sen. Enzi added that his support for the concept was reinforced after a recent conversation with Sen. Christopher Dodd, D-Conn.
“He said insurance companies have to keep an eye on the bottom line, and that the reason we have so many insurance mandates is that insurance companies otherwise would have complete control over what is and isn’t covered,” he said. “In other words, health insurance is a seller’s market, and the sellers control the product and dictate the terms. Having been in business before, I understand what Sen. Dodd was saying.”
After the vote, Sen. Enzi said “it’s time for the Senate to pass this bill. No more excuses.”
Opponents of the bill argued, however, that it steps on the toes of the states.
The legislation “effectively preempts the judgment and decisions of the people of my state,” said Sen. Edward Kennedy, D-Mass., the ranking minority member of the panel, adding the bill was an “extraordinary reach” of federal powers.
Massachusetts, he explained, already has one pool for small businesses to purchase coverage for their employees in the state.
Additionally, Sen. Kennedy criticized the bill for limiting what states additionally can do to help protect consumers, calling the bill, “a ceiling, not a floor.”
“This is a ceiling with great preemption of states,” he said. “It doesn’t have to be this way.”
Dan Danner, executive vice president of the National Federation of Independent Business, celebrated passage of the bill, calling it “a good day for small business owners.”
The NFIB is a member of the Small Business Health Plan Coalition, which has worked to promote the legislation in Congress. Similar legislation, he noted, has been approved by the House eight times over the past decade.
“SBHPs will level the health-insurance playing field and give participating small businesses the same buying power as Fortune 500 companies and unions by allowing them to band together through trade and professional associations to purchase affordable health benefits,” he said. “By joining together across state lines, small employers will enjoy savings from greater bargaining power, economies of scale and administrative efficiencies.”
Several groups also voiced their opposition to the bill before the vote, including advocates for diabetics, chiropractors, taxpayers and the National Conference of Insurance Legislators, Troy, N.Y.
In a letter sent to Sens. Enzi and Nelson on March 14, a group of NCOIL’s current and past officers and committee chairmen voiced concern over the bill’s “one size fits all” approach and the possibility that it could lead to adverse selection.
“Adverse selection would trigger a fragmentation of the market, which, ultimately, could contribute to the nation’s growing underinsured and uninsured populations and place significant additional pressure on the ‘high risk pools’ currently available in the states,” said the NCOIL members, including president Frank Wald of North Dakota and past president Craig Eiland of Texas.
NCOIL also raised the issue of consumer protections.
“In its current form, the bill also allows insurance companies to sue states for injunctive and/or equitable relief but ironically provides no such relief for consumers against insurers,” they said. “Without state officials to depend on for assistance or an opportunity to legally challenge insurers, consumers will be isolated in times of need.”