Businesses back health insurance pools

By Erin Moriarty

Atlanta Business Chronicle

Updated: 8:00 p.m. ET July 24, 2005



A handful of Atlanta executives and politicians are leading the charge in Washington to seek relief for small businesses struggling with rising health insurance costs.



The executive director of The Coca-Cola Bottlers' Association in Atlanta is heading up a coalition of 35 groups nationwide that are pushing for proposed legislation that would let small businesses in different states pool together to buy health insurance as a way to boost their buying power.



The bill in the Senate is co-sponsored by Sen. Johnny Isakson, R-Georgia, and the bill in the House of Representatives is co-sponsored by U.S. Rep. Phil Gingrey, R-Georgia.



The proposal involves changing federal laws to allow small businesses to join together through trade associations or other industry groups to form "association health plans." The proposed legislation would exempt the plans from each state's own mandates governing insurance plans -- making it possible for them to sell an insurance plan to small businesses across the nation. The plans would instead be subject to federal regulations.



"When you have one state with two mandates and another with 22, the burden of complying with of all those is huge," said Tom Haynes, executive director of The Coca-Cola Bottlers' Association.



The Coca-Cola Bottlers' Association has been helping its members obtain health insurance for decades and at one point it ran a program that pooled small bottlers together to buy insurance. Haynes said federal legislation allowing association health plans would be a major help to smaller bottlers struggling with health insurance costs that are about $1,500 to $2,000 per employee per year more than what a big company pays.



"That cost alone may represent 20 to 25 percent of a small bottlers' profitability," Haynes said. "We do a lot of things for these [bottlers], but the one thing they want most is to have affordable health insurance. It's probably the most important problem for us to solve."



But the proposal raises serious concerns in the insurance industry.



"If they're exempt from state regulation, there is no way on God's green earth that the federal government can check these organizations for solvency, and that's one of the main functions of state insurance departments," said Kirkland McGhee, executive director of the Georgia Association of Health Plans. "Multiple Employer Welfare Arrangements in the 1980s were like that and they stole money from people ... and companies like Blue Cross Blue Shield and Aetna had to pick up the mess that those people left. I'm afraid AHPs are like the second coming of that."



McGhee, who spent part of his career investigating fraudulent insurers for the state of Georgia, said the proposed federal regulation, which would be implemented through the Department of Labor, would not be as stringent as having state officials watch over plans locally.



"There are a lot of fly-by-nights out there who don't know the insurance business," he said. "It's hard to be in the insurance business, so we should not be letting people who don't have the sophistication of the insurance business get into the business in the name of theoretical savings."



Association health plans have been floated in Washington, D.C., for years -- each time generating controversy -- but some insiders predict the proposed legislation has a better chance to pass this year than ever before. They say the bills, one in the House of Representatives and the Senate, have bipartisan support and are more likely to be a priority since the problem of the nation's uninsured has become more acute.



"I feel that we've got a pretty good chance this year," said Haynes of The Coca-Cola Bottlers' Association.



Rep. Tom Price, R-Georgia, said he hopes Congress will pass the proposed legislation this year.



"Anything we can do that provides greater incentives and opportunities for people to be able to purchase insurance is a step in the right direction," Price said.



The bill passed favorably out of the House Committee on Education and the Workforce in March. The Senate Committee on Health, Education, Labor and Pensions held hearings on it in April, and is expected to vote on it in August or September.



"It has more support in the Senate than it has ever had," Isakson said.



Isakson, who served as president of Northside Realty for 22 years, said his business experience motivated him to push for this legislation in Washington.



"I saw firsthand, for a young or middle-aged person working as an independent contractor in sales, the limited opportunities they had to purchase health insurance," Isakson said. "It's really tough. It's really gotten worse in the past 10 years."



Haynes said his coalition has also been working with the National Federation of Independent Business to support the proposed legislation.



"The price of health insurance would be so much less for small businesses," said Melody Harrison, the federation's Georgia director. "Small businesses could buy it just like all major companies and unions are able to buy it."



While proponents see it as a way to provide more affordable health insurance, insurers say it could actually do just the opposite.



"I think the last thing we need to do is further segment the market," McGhee said. "We certainly don't need to segment it to allow people to do a plan that would let them cherry pick members. That will put the cost of the uninsured more on organizations like hospitals."



Charlie Harman, spokesperson for Blue Cross and Blue Shield of Georgia Inc., said it would upset the balance of healthy and unhealthy that a typical insurance company covers.



"More healthy people who may not see themselves going to the hospitals and needing the state-mandated benefits will select the [associated health plans] and Blue Cross Blue Shield will be left with the less healthy people, who will have higher claims and higher costs," Harman said.