State House squanders chance
to help small businesses
afford health care

By Carl Gipson
Guest Editorial

In the last week of the 2006 Washington state legislative session, a majority of elected officials in the House squandered an opportunity to help small businesses where they need it most: providing access to affordable health insurance.

The state Senate passed a plan that would have legalized low-cost health insurance plans — and lawmakers did it in a bipartisan way. Out of 49 senators, 42 voted to give small businesses a leg up, a majority well beyond landslide proportions. The state House saw things in a different light and stripped away the opportunity for small businesses to offer affordable health insurance coverage.

According to the National Federation of Independent Business, in 1993 65 percent of businesses in Washington state offered health insurance to their employees. In 2001, that number had fallen to 47 percent. Similarly, the Kaiser Family Foundation reports the percentage of national firms offering health insurance fell from 69 percent to 60 percent in the last five years.

There is little doubt that access to affordable health insurance is one of the policy problems that keep small-business owners up at night. Many employers face the dubious endeavor of finding qualified employees without being able to include family health coverage along with salary.

Receiving health insurance through an employer as part of a compensation package is expected in today’s society. But legislators in Olympia keep putting the goal of affordable health insurance further out of reach for small businesses and the families that need it.

Here’s what happened. Senators put together a package that would have made it legal for health insurance companies to offer a pared-down, limited-mandated health insurance plan to small businesses.

Right now, employers can only choose between no health-care coverage and the expensive “Cadillac” plan that must pay for 49 mandatory health services. Many employers cannot offer their employees health insurance because it simply costs too much and would result in lower benefits, such as reduced or static salary, for employees.

This was the prevailing attitude at Washington Policy Center’s 2005 Small Business Conferences in Western and Eastern Washington. Both conferences were forums where small-business owners discussed a range of policy recommendations, and health insurance was by far the most popular topic.

The No. 1 recommendation from small-business owners was for access to affordable health insurance by legalizing a bare-bones health insurance plan. True, it is not the expensive “Cadillac” plan with all the fancy options, but health insurance to protect against catastrophic emergencies is far better than no coverage at all.

One of the big reasons why many small-business employers are unable to afford health insurance is because our health insurance industry is highly regulated and, therefore, the insurance companies are unable to offer cheaper insurance.

Washington state has 49 health insurance mandates — meaning health insurance companies are required by law to provide 49 specific areas of coverage with each plan (areas of coverage include acupuncture, contraceptives and mental health). By comparison, Oregon has 31 mandates and Idaho has 13.

Small-business owners were not asking that all mandates be stripped from every plan for everyone — indeed that sort of thinking is indicative of how this mess was created in the first place. They simply wanted legislators to recognize the need for choice.

Right now, small-business owners face only one choice: provide an incredibly expensive health insurance plan or none at all. Legislators in the state House of Representatives had a choice, too. They could have accepted the Senate plan and helped small businesses and the uninsured gain access to affordable health insurance, but the majority of representatives dropped the ball.

Many new ideas, good and bad, pass through the halls of the state Capitol every session. It is good that legislators hesitate to jump onto any idea without taking the necessary time to get facts. But allowing affordable health care is a proposal that has been around for quite some time. It is one proposal whose time has come.

Carl Gipson is director of the Small Business Project of the Washington Policy Center, a nonpartisan, nonprofit research and education organization. For more information on the center, call 206-937-9691 or go online to www.washingtonpolicy.org.