Private sector efforts alone are not enough to help small companies provide health insurance for their workers. In this study supported by The Commonwealth Fund, policy analysts find that purchasing cooperatives and other programs initiated by business coalitions over the last decade have had only limited success in making insurance more affordable to small-business employees. To be successful, they say, these programs will require federal and state support in the form of seed money, expertise, regulatory reform, and help in defraying high-cost insurance claims.
In Business Initiatives to Expand Health Coverage for Workers in Small Firms, Jack A. Meyer of the Economic and Social Research Institute and Lise S. Rybowski of the Severyn Group assess the potential of initiatives that pool risk to improve bargaining power for small firms. About 47 percent of the working uninsured are employed by firms with fewer than 100 workers.
Business coalitions help small firms get health coverage in one of two ways. In most cases, a large employer group creates, or takes control of, a health insurance purchasing cooperative for small employers. In other cases, large employer groups share their health care provider networks-and thus the discounts they are able to negotiate-with small businesses.
The authors found that some of these efforts have made a difference in providing coverage to uninsured employees of small firms. In particular, New York's HealthPass program, a joint creation of the New York Business Group on Health and the City of New York, has drawn a steady stream of employers attracted by its ability to offer a choice of health plans that together cover a wide geographic area.
Overall, however, large-employer initiatives have been mostly unable to lower the number of uninsured workers. With the exception of HealthPass, only 10 to 20 percent of small companies enrolled in these programs since the mid-1990s are offering insurance for the first time.
If the goal is to expand health insurance coverage within the small-business sector, then the public sector will have to step in to make private insurance more accessible and affordable to workers, says Meyer, the study's lead author. That will require government to stimulate the business community's interest in lending its expertise to smaller firms, provide seed money and other resources to support programs until they are self-sufficient, and develop regulations to attract small firms. Facts and Figures
- The proportion of small firms offering health insurance has increased in recent years, from 54 percent in 1998 to 67 percent in 2000. Still, this pales in comparison to the 99 percent of firms with 200 or more workers that offered health coverage in 2000.
- Programs developed by large-employer coalitions for small firms cover only 2,500 to 3,000 previously uninsured workers in Colorado and only 25,000 to 30,000 in California-in both states, a small percentage of the total.