Labor secretary presses health-care idea

WASHINGTON -- Labor Secretary Elaine Chao waded into the patients' rights debate Wednesday, pressing a Bush administration idea to help small businesses offer better, cheaper health insurance to their workers.

Bush wants to help small businesses offer their workers the same health care benefits as Fortune 500 companies by letting them pool together to increase their buying power and push down premiums.

"Small companies have premiums 20 to 30 percent higher than large companies," Chao said during a Senate hearing on expanding "association health plans," which are now available only in some states. "AHPs are a way to help small employers spread their risk and get the cost down."

The debate unfolded Wednesday before the Senate Small Business Committee, which was holding its first hearing of the new Congress. On the dais were Missouri's senators: Republican Jim Talent, who championed the proposal as a House member, and Kit Bond, the panel's former chairman.

"Because insurance will be more affordable, more small firms will provide it to their families," Talent said.

41 million without

In all, 41 million people in the United States lack health insurance. The government says employees of small businesses and those who are self-employed account for 60 percent of Americans who have no health insurance.

Bush's proposal opens up the long-running debate over how to hold HMOs responsible for harming those they insure, because the small business plans would be under federal oversight and therefore free from patient protections required by dozens of states.

Massachusetts Sen. John Kerry, a Democratic presidential hopeful, cited examples of patient care that dozens of states require insurers to offer: emergency room visits, obstetrician care, mental health treatment, and mandatory grievance procedures.

"All of these are consumer protections that states have spent more than a decade putting into place," said Kerry, who opposes the measure.

In addition to Senate Democrats, foes include state regulators, consumer groups and the Blue Cross and Blue Shield Association, which is a major provider of coverage for small businesses.

They argue that under federal -- rather than state -- oversight, insurers offering the small business pools would "cherry-pick" younger, healthier workers, driving up costs for sicker workers. And they say Chao's Labor Department doesn't have the resources or expertise to regulate the plans to guard against fraud.

"Insurance is of little use, unless the costs of caring for the relatively few can be distributed among the many who are healthy," said Kansas Insurance Commissioner Sandy Praeger, who testified on behalf of the National Association of Insurance Commissioners.

The idea stalled previously in the narrowly divided Senate after winning passage in the Republican-controlled House, but it's getting a friendlier reception this year on Capitol Hill. The GOP regained the Senate majority with the election of Talent.

Talent said Wednesday that under earlier health plan bills, the plans had to offer coverage to sicker workers. The panel's new chairwoman, Sen. Olympia Snowe, R-Maine, is expected to formally introduce legislation on the issue later.

Talent said there would be little extra burden on Chao's Labor Department, because its likely the proposal would result in only a few, very large pools.

"You would only be adding maybe 15 to 20 plans," Talent said to Chao. "That's an incremental increase in your regulatory burden at best, because you're already regulating" thousands of employer-offered health plans.

Snowe waved at a chart on the mantel behind her showing that health care premiums rose 13 percent from 2001 to 2002 for employer-sponsored health insurance.

"Yes, we have state purchasing pools, but they're so small, they don't have enough employees to spread the risk," Snowe said.

Chao said the small business plans are just one way of pushing down health care costs and would work in tandem with other Bush administration priorities, including establishing federal limits on damages in medical malpractice suits.