Small business plan draws friends, foes

Business groups and regulators in northern Nevada are keeping a close eye on a proposed federal measure that would allow more small employers to buy health insurance through associations.

The United States Chamber of Commerce backs the proposal, local chambers continue to study it, and Nevada Insurance Commissioner Alice Molasky- Arman is strongly opposed.

The measure, known as H.R.

660 in the House of Representatives and S.

545 in the Senate, would encourage creation of Association Health Plans AHPs for short.

A business or trade association that's been in business for at least three years could offer an AHP for small companies that are members of the association.

The AHP could provide coverage for active and retired employees of the company as well as owners, officers, directors and their beneficiaries.

Backers of the bill it currently has 130 co-sponsors in Congress say the proposal would increase the bargaining power of small businesses with health carriers.

This, backers say, might cut the health-insurance costs of small businesses by as much as 30 percent a figure that makes the costs comparable with those paid by big businesses.

"Small businesses have little buying power and few affordable options," the United States Chamber of Commerce said as it endorsed the proposal.

"This lack of competition is contributing to double-digit rate increases for many small businesses."

The Congressional Budget Office estimated in 2000 that use of AHPs could reduce health-insurance premiums for small businesses by an average of 13 percent anywhere from $450 to $1,250 per employee.

"The smallest firms stand to save the most from AHPs because their administrative costs, which account for a significant percentage of their expenses, will decrease," the United States Chamber said.

But Nevada's insurance commissioner warned that those cost-savings will increase the chances that businesses will fall victim to phony insurers.

In a letter this summer to U.S.

Sen.

John Ensign of Nevada, Molasky-Arman noted that some of the cost savings promised by AHP backers arise because the plans would be exempt from state regulation.

"Unfortunately, Nevada has suffered bitter effects from these kinds of organizations due to the ambiguities in current laws which, in my mind, should be strengthened to preserve and secure the state's authority to protect its citizens," the insurance commissioner wrote.

She said a scam company known as Employers Mutual LLC resulted in losses of $10 million to Nevada businesses after the company used a loophole to avoid state regulation.

"We constantly warn small businesses that if an insurer's offering is too good to be true, it is not true," Molasky-Arman said.

"The proponents of AHP legislation make claims that are just too good to be true."

The true cause of increases in healthcare premiums, she said, is simple to find skyrocketing spending on health care.

While the United States Chamber of Commerce endorsed the measure, the Reno-Sparks Chamber of Commerce continues to study the proposal and hasn't decided on a stance.

At the Sparks Chamber of Commerce, meanwhile, Executive Director Len Stevens said the organization is studying whether it might offer an AHP to its members if the legislation is approved.

Better yet, he said, might be a joint effort of chambers of commerce in the region.

"It seems that the best avenue is if all the chambers could combine and come under one umbrella," he said.

"When you have the numbers, you can lower the cost of the premiums."