Raleigh to weigh health insurance incentive options - Triad - MSNBC.com

By Mark Tosczak
The Business Journal of the Greater Triad Area
Updated: 8:00 p.m. ET April 9, 2006

Two proposals aimed at reducing the cost of health insurance for the uninsured and small businesses will be introduced when the General Assembly goes into session next month, according to Triad delegation members.

The proposals are based on programs that have been implemented in other states, and are meant to encourage more small businesses to provide health insurance for employees by lowering health care costs and, therefore, lowering insurance premiums.

Story continues below ↓
--------------------------------------------------------------------------------
advertisement

--------------------------------------------------------------------------------

"What we're trying to do is get some of these uninsured people covered by providing incentives," said Rep. William McGee, a Winston-Salem Republican who's a member of the House Select Committee on Health Care's subcommittee on the cost of health insurance. His group has been evaluating ideas for reducing the cost of health insurance and getting more people covered.

One proposal would have the state create a high-risk pool that would put a cap on premiums, especially for those who are self employed, classified as "high risk" or who otherwise might be charged premiums that would be unaffordable.

The other major proposal could have a broader affect, creating a reinsurance pool for small businesses that would lower insurance companies' cost and, the theory goes, therefore lower premiums.

Details unclear
Many details of the proposals still haven't been worked out, including how much they might cost the state, employers and insurance companies. Still, if passed into law they would represent one of the biggest changes to health insurance in North Carolina in recent years.

"We should have done them a couple of years ago, probably," said Adam Searing, director of the North Carolina Health Access Coalition, an advocacy group in Raleigh. "They are ideas who's time has come."

Also likely to be discussed in the General Assembly this session will be a proposal, which passed the House last year, to create a tax credit for businesses with 25 or fewer employees that provide health insurance for their workers.

The devil, of course, will be in the details. The reinsurance pool for small businesses is based on a program implemented in New York state four years ago. The program would reimburse insurers for a portion, perhaps 90 percent, of claim costs within a certain range -- say $15,000 to $75,000, though the exact numbers will depend on how the legislation is drafted.

As currently envisioned, the program, dubbed Healthy North Carolinians, would apply only to businesses with fewer than 25 workers that had not had group health insurance for the last 12 months. In addition, a certain portion of the workers would have to be classified as low income.

Equity questions
That's raised fairness concerns with some, and worries that it might create an incentive for businesses to drop health insurance for a year to get into the plan.

"If we're going to apply something for employers who are not providing insurance and we had other employers who were already doing that and didn't offer them the same opportunity, I think they would be kind of upset about it," McGee said.

David Moore, a health insurance broker in Burlington and past president of the N.C. Health Underwriters Association, suggested the inequity could be addressed with a tax credit for businesses that already provide health insurance. He doubted many businesses would drop their coverage just to apply to the new program, though.

"I don't think many employers are going to say 'Well, I'm going to cancel my group insurance for 12 months so I can buy the Healthy North Carolinians next year,'" he said.

He did say, however, that such a program wouldn't be successful unless insurance agents like himself have an incentive to go out and sell it.

Still, even advocates of the proposals agree that although more working people might end up with insurance if the two proposals pass, those and other health- insurance related matters the legislature likely will consider this year won't solve the problem of the uninsured.

Searing estimates that both the high-risk pool and the reinsurance fund would help provide health insurance to perhaps 100,000 people who don't have it now.

"We have 1.3 million people who don't have insurance in the state," he said. "Without a commitment to control health costs from both the state and federal level, we cannot solve this problem."