Health Insurance break likely but may not last

Howard Fischer
Capitol Media Services

Small Arizona businesses and their employees who have no health insurance may get some state help, but it could be temporary.

Gov. Janet Napolitano has signed legislation providing state tax credits to health insurance companies that write policies for those who do not have coverage. The credits would cover half the cost of premiums, up to $1,000 a year for individuals and $3,000 for families.

But the insurers would not keep the money: House Bill 2177 requires them to discount their premiums by the same amount.

Rep. Doug Quelland, R-Phoenix, said the idea is to help the estimated 1.1 million Arizonans, more than one out of every six residents, who do not have health insurance.

Quelland said that perhaps half of those people are choosing not to spend the money. But he said the other half would like insurance but make too much to qualify for state-paid coverage while not earning enough to be able to afford the premiums themselves.

This subsidy, available to businesses with between two and 25 employees as well as individuals who are employed there, would last a maximum of three years. After that, the person or company would have to either absorb the full cost or decide whether to go without insurance.

Quelland, however, said he doubts that most of those who will get the state help will choose the latter because they will recognize the benefit of having coverage.

"Maybe sometime in that three years they actually used it and they might see some value to it," he said. But he conceded that might not be the universal response, with others concluding they really don't need insurance and, if they have a major illness, they will go to a hospital emergency room.

The new law could reduce state revenues up to $5 million a year, the maximum of tax credits for insurers allowed annually. But Quelland, who had originally sought $20 million, said he hopes the program proves such a success that lawmakers will expand it next year.