The United States Senate is embroiled in a debate over SB 1955, a bill that purports to help small businesses purchase health insurance. Offered by Sen. Mike Enzi, R-Wyo., the dialogue on finding solutions for small businesses is critical.
While most Americans (61 percent) obtain health insurance from employers, this is true for just over half of Californians. Small businesses are California’s economic engine, and yet, higher premiums and administrative barriers make it much more difficult for small businesses to purchase insurance. California insurance premiums have increased 60 percent between 2000 and 2004, and small businesses have seen even higher increases.
The lack of employers offering insurance helps push California to No. 6 nationally in the percent of uninsured residents, with a whopping 21 percent lacking coverage.
As a result, SB 1955’s concepts of "simplification" and "harmonization" sound appealing. But, the pro-business rhetoric doesn’t match the bill’s anti-business impact on California.
In the name of "simplifying" the system, the federal legislation would preempt existing California laws — laws that keep premiums down. Right now, state law holds small business insurance rates within a certain range, regardless of employee health.
California small businesses with older employees and those with even one chronically ill person are certain to be hit with higher costs under SB 1955. And California’s smallest firms — including those with young, healthy employees — would see higher costs, because protective rules would be gone. Even the Congressional Budget Office, the nonpartisan research arm for Congress, has said that SB 1955 will increase many businesses’ premiums.
And in the name of "harmonization," SB 1955 eliminates California rules requiring that certain health benefits be offered by all insurers. But many of our requirements are for preventative services that both help people and keep costs down — benefits such as mammograms, diabetes care and child vaccinations that insurers don’t always cover. If harmonization means losing these protections, then California should be allowed to go its own way.
Small business deserves real solutions to the health crisis. The good news is that SB 1955 recently suffered a negative procedural vote in the Senate. The politicians should first do no harm and drop the bill entirely. Then, we in California need to enact bipartisan, commonsense solutions that can bring down health care costs, such as:
» Promoting electronic medical records. Health care record-keeping is done today pretty much as it was 50 years ago — with paper and pen. This leads to unnecessary costs and to poor care because doctors don’t have the information they need. Electronic medical records will be more efficient and complete. That’s why we need to continue the bipartisan work in the California Legislature by Sens. Elaine Alquist, D-Santa Clara, and Abel Maldonado, R-Santa Maria. This promising bill would give tax credits to physician offices for health technology investments.
» Fighting obesity. Obesity adds tens of billions to California health care costs by increasing the rates of diabetes and other chronic disease. And children have some of the fastest growing obesity rates. To address this, state Sen. Tom Torlakson, D-Antioch, has sponsored needed legislation promoting physical education in school. Governor Schwarzenegger has also already taken steps to combat obesity. Both efforts should be supported.
» Promoting pay-for-performance. Any small-business owner will tell you that accountability is critical for success. But too many health insurers fail to evaluate what they are buying. A revolutionary idea would be for Medi-Cal to set quality benchmarks for care purchased. As the state’s primary health insurance program for low-income residents, with more than $30 billion in annual spending, Medi-Cal has a commanding marketplace position that would allow it to pioneer quality care — clearly a bipartisan goal.
These ideas will start to bring down health care costs for all employers and won’t engender the kinds of bitter political battles we have seen around SB 1955. It’s time to stop making health care into a political football and instead to start making progress for small businesses and their employees.Scott Hauge is the founder of Small Business California, a small business advocacy organization, and owner ofCAL Insurance & Associates, a small business employing 30 persons. Peter Harbage is a senior program associate at the New America Foundation, a nonpartisan, nonprofit public policy institute with offices in Sacramento and Washington, D.C, and president of Harbage Consulting, a Sacramento-based consulting firm.