Backers of government-run health care continue to push their agenda in Olympia this year. And their efforts threaten to destroy a successful market for small business health insurance, raising costs for everyone and eliminating consumer choice.
Here’s the background. Last year, the Legislature set up something called the Health Insurance Partnership (HIP). Intended to provide subsidized access to low-income employees of small employers, the program has yet to deliver on the promise. But already proponents have geared up to expand the program into a massive government subsidy of health insurance for all employees of small business, regardless of financial need or access to high-quality, affordable insurance offered by their employers.
The legislation adopted last year would have subsidized the insurance premiums for low-income employees of small businesses. To be eligible to participate, the employer must have at least one qualified low-income employee. The Partnership would have determined which policies would be made available for subsidy and set the rules for how much and whether the employer would have to contribute. As with any government intervention into the private health care market, the policies and procedures are complex and the decisions made by a small group of insiders.
But even with that risk, at least last year’s legislation minimized the risk by limiting the program to a targeted population of low-income people: the people most in need of government health care assistance. Further, the program avoided any direct competition with the private plans that are working so well for many small employers.
For example, in 1995, after this state’s disastrous attempt to enact government-run health care, Gov. Mike Lowry worked with lawmakers and employer groups to make it possible for small employers to purchase health care through their trade associations. Providing these groups with some regulatory relief allowed them to offer affordable health insurance to many of our state’s smallest businesses. Today, these association plans cover 500,000 employees and their families. As important, association plans preserve employer choice because these policies are offered in a competitive marketplace.
Contrast that successful program to what’s being proposed now. HB 2537 turns last year’s targeted legislation into an all-out attempt to have government dominate the small business health care market, reducing choice by eliminating competition and putting plan design into the hands of the unelected HIP board.
It’s a bad deal for small employers, the men and women who work for them, state taxpayers, and all of us who care about a healthy, competitive marketplace.
Rather than targeting assistance to low-income employees and their families, the new legislation would make all employees of small businesses eligible to purchase insurance through the HIP. To reduce the price employees would pay for the insurance, taxpayers would pay the administrative costs.
While the prices seen by consumers may be lower, count on it: the real cost — including the hidden overhead — would be no bargain for anyone. From our experience, we know employers want the ability to offer their employees access to affordable health insurance. It’s the right thing to do. And it’s good business: a high-quality benefit package helps attract and retain productive, loyal employees.
With the state offering a subsidized package, cost-sensitive small businesses will migrate to the HIP plans. Their departure will destabilize and ultimately destroy the market for private plans that do not enjoy taxpayer support. And then, they’re trapped, with no escape from higher taxes and higher premiums to prop up another high cost government monopoly.
No one defends the status quo. Changes must be made. More people need access to affordable, high quality health care. But the answer lies in tapping the energy of a vital, vibrant marketplace. As they did in 1995, lawmakers should expand choice by providing more flexible insurance products tailored to the needs of employers and their employees.
Rather than promoting innovation, choice, and creativity, the HIP expansion will replace a competitive marketplace with a costly government experiment. That can only make sense if the ultimate goal is a complete government takeover of health insurance, something most Washingtonians wisely continue to resist. Lawmakers should resist it too.
Don C. Brunell is president of the Association of Washington Business.
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