Gov. Matt Blunt recently signed legislation aimed at increasing access to affordable health insurance for employees of small businesses.
The bill, sponsored by Rep. Jay Wasson, R-Nixa, expands eligibility for association health plans by decreasing the mandatory number of members from 100 to 50. The Department of Insurance also would be allowed to exempt insurers that cover both small and large businesses from certain rate restrictions.
Blunt said giving small businesses access to affordable health coverage is one way to keep more people out of emergency rooms.
“I believe this will be among the most important legislation we pass this year,” he said during a visit to Kansas City, one of several stops around the state to promote the new law.
Friday also marked the last day for the governor to sign bills, and the health insurance measure was his final act on legislation passed this spring. With a Republican-led Legislature sending bills to a Republican governor, Blunt vetoed no bills this year, though he did bar a few spending items in budget bills, mostly for technical reasons. In all, 165 new laws were enacted.
Association or consortium health plans were already available for small businesses under existing law, but this bill allows the establishment of “protective covenants,” according to Rep. Doug Ervin, R-Kearney. Instead of bidding for health insurance as 50 individual businesses, the covenants allow a particular association to submit one bid for the whole group, which is then treated as one large company.
Ervin believes the covenants also will help to drive down the cost of health coverage by allowing consortiums to pressure individual members to keep employees healthy. For example, if one company has too many smokers whose health claims are driving up premiums for the entire association, other companies in the consortium can nag the bothersome one to make changes. However, consortiums are not allowed to oust the offending company.
“Peer pressure is a good thing in this case,” Ervin said.
There is no cap on the number of employees a company can have to join a consortium. Small businesses with two employees could form associations with companies that employ 200 people. The larger the number of employees in a consortium, the more evenly risk is distributed.
The legislation is modeled after a pilot project that involved the Southwest Area Manufacturers Association’s health care consortium. The consortium, with 32 member companies, represents 1,300 employees and covers 2,000 people. The companies were required to sign up for at least 30 months of coverage. Six companies were unable to afford group health care coverage for their employees before joining the consortium, the governor’s office said. Initial premium savings ranged from 18 percent for large employers to up to 50 percent for small employers.
Businesses cannot form a new organization strictly to get lower-cost health coverage, said Brent Butler, the Missouri Insurance Coalition’s government affairs director. Most already belong to industry associations, such as a chamber of commerce.
“This gives one more option to small business owners when they go out to shop for health insurance benefits for themselves and for their employees,” said Kelly Peerson, grass-roots coordinator for the National Federation for Independent Business, which lobbied for the legislation. “If you own a business and you would like to have health insurance for your employees, you’re limited in what you can shop for.”