Health Insurance Premiums Continue to Increase

As small business owners, you have undoubtedly experienced these increases firsthand. The Kaiser Family data indicates that between the spring of 2003 and 2004, employer-sponsored health insurance premiums rose by 11.2 percent, down from 13.9 percent the previous year, but the fourth consecutive year of double-digit premium growth. The average premium for family coverage was $9,950 annually ($829 per month) and the average premium for single coverage was $3,695 ($308 per month). Premiums for this period increased at FIVE times the general rate of inflation (2.3 percent) and wage increases (2.2 percent). Since 2001, premiums for family health insurance coverage have increased by 59 percent.

The number of small employers (3-199 workers) providing health insurance fell from 68 percent in 2001 to 63 percent in 2004 and the number of all workers receiving health coverage from their employer also declined from 65 percent in 2001 to 61 percent in 2004. Based on the survey results, the Kaiser survey estimates that there are 5 million more jobs that DO NOT provide health insurance in 2004 over the previous year.

So where do we stand on the Association Health Plan legislation? As usual it's languishing in the august body known as the U.S. Senate, but frequently referred to as "the graveyard of good ideas". So we need an all court press on Senators to cosponsor this vital legislation. President Bush supports this concept; he even mentioned it in his speech to the Republican Convention. But the Administration won't push for a vote on the bill unless they think it will pass.

Worse still, the Chairman of the Senate Labor Committee which has jurisdiction over this legislation, Judd Gregg of New Hampshire, remains skeptical that the AHP legislation will resolve the problems of the uninsured. Senator Gregg worries that AHPs would enable insurers and businesses to "cherry-pick" young and healthy employees, leaving the sickest and oldest to pay higher health insurance premiums in state-regulated plans.

So Senator Gregg and his staff are currently drafting an alternative that would prompt the development of standardized health insurance products which could be offered across state lines. The forthcoming legislation would aim to "use the federal muscle to compel states by mandating that they create an interstate commerce among the common regulatory categories" for health insurance. The bill would also attempt to provide cost savings and easier access to health insurance to consumers shopping for coverage in the individual market, employers seeking coverage in the small group market and fully insured large firms. More importantly, the bill would try to encourage national insurance carriers that have retreated from the small group and individual markets to return.

While these are all worthy provisions, I still believe that AHPs are one of the best alternatives for our association. I encourage all of you, if you haven't already done so, to write your Senators and ask them to get behind the AHP legislation. The Gregg legislation will undoubtedly draw more attention to the problems of the uninsured because it raises many of the same issues. More importantly, the Gregg bill should provide an opportunity for extensive consideration of the AHP proposal.

If you have any questions or comments or wish to discuss this issue further, please don't hesitate to contact me directly at 703-671-4468 or mjmarshall@masoncontractors.org.