Expanding the Options for Affordable Health Care

By May 8, 2006Health Care

Health care coverage has developed into one of manufacturers’ most important tools for recruiting and retaining skilled workers.

As a result, 84 percent of manufacturers provide health care benefits to their employees, a level of coverage second only to government.

But more and more manufacturers are finding it difficult to afford annual increases in their premiums, which often hit the double digits. Rising costs stand in the way of manufacturers’ ability to compete — sometimes even to survive — and act as a disincentive to hiring new employees and establishing new jobs.

The problem can become even more acute for small manufacturers, for whom personnel costs represent major portions of their budgets. These manufacturers lack the size and buying power to negotiate the discounts with their insurance providers that can control health-care costs.

One solution is to allow well-established trade associations to offer affordable health insurance coverage to their members through Small Business Health Plans (SBHPs). With their size, reputation and purchasing power, the trade associations enjoy advantages in the health-care marketplace now unavailable to individual, small employers.

The U.S. Senate is currently considering legislation to provide this promising option, S. 1955, the Health Insurance Marketplace Modernization and Affordability Act.

S. 1955 would reduce the cost of health insurance for small employers by 12 percent — or $1,000 per employee — according to one respected actuarial firm. Furthermore, the legislation would take a major step in insuring the uninsured, extending coverage to more than one million Americans in working families.

Consumers and employers alike would be protected by a full range of existing authorities. Under the bill, each state would have to license the SBHPs, thereby preserving the traditional role of the states in protecting the interests of insurance consumers.

While allowing the employer to control costs, the legislation would also give many employees more options in health care than they have now.

Passage of S. 1955 is certainly one of the best ways Congress can ensure that manufacturers continue to provide health-care coverage, and in doing so, meeting one of the most critical demands in the competitive marketplace.