One alternative, health savings accounts, was created by the Medicare Prescription Drug and Modernization Act in 2003, and has garnered support among business advocates as a work-around. Essentially, HSAs allow employees to set aside pre-tax dollars to use on health care, kind of like a health IRA. In conjunction with a high-deductible plan, this reduces some of the premium costs to employers, and puts more responsibility in the hands of employees.
Not everyone favors HSAs. The Commonwealth Fund, for one, says the plans are not a cure-all, and that they place an undue burden on families to pay for their health care.
"The fact is that HSAs won't help the uninsured or low-wage workers, a group for whom tax benefits are of little value," says Commonwealth Fund President Karen Davis, in a September letter. "A 2005 Fund report showed that 55 percent of the uninsured are in a zero percent tax bracket."
This is in addition to the concern that people covered under high-deductible plans might avoid getting medical care due to the cost. A bleak situation indeed, unless small businesses gain more options for health insurance.
Adds Mr. Barrera, "For small businesses to remain competitive, they need to have incentives. The true engine of any business is its employees, and the engine runs better when you have happy employees."
Legislative Update
As with most legislation drafted in the House or Senate, many proposals will never see the light of day in Congress. However, the contentiousness of the partisan, pre-election sparring in Washington is making casualties of several issues such as affordable small-business health care. The following are just a few proposals introduced in the House or Senate within the last year – some have had more success than others:
H.R. 525, the Small Business Health Fairness Act of 2005
Introduced by Rep. Sam Johnson
(R-TX), 135 co-sponsors
"To amend title I of the Employee Retirement Income Security Act of 1974 to improve access and choice for entrepreneurs with small businesses with respect to medical care for their employees."
• Passed the House in 2005, but still in committee in the Senate. There are similar Senate bills, but those too, have seen no action.
S.1955, Health Insurance Marketplace Modernization and Affordability Act
Introduced by Sen. Michael Enzi,
(R-WY), Seven co-sponsors
"A bill to amend title I of the Employee Retirement Security Act of 1974 and the Public Health Service Act to expand health care access and reduce costs through the creation of small business health plans and through modernization of the health insurance marketplace."
•Bill was marked up in committee then returned to the calendar at the end of July.
UPDATE: Neither bill has been sent to conference (where House and Senate compare bills and come to a consensus) in the 109th Congress or any of the previous two congresses when similar bills were introduced.
S. 1329, the Small Business Health Care Act of 2005
Introduced by Sen. Evan Bayh (D-IN), No co-sponsors
"A bill to amend the Internal Revenue Code of 1986 to provide for a tax credit for offering employer-based health insurance coverage and to provide for the establishment of health insurance purchasing pools."
•Read twice then referred to the Senate Finance Committee.
H.R. 5288, the Small Business Health Plans Act of 2006
Introduced by Rep. Thomas Allen
(D-ME), 26 co-sponsors
"To establish a small business health benefits program." (Would allow for small businesses to purchase health insurance through a program operated by Health and Human Services, similar to how the federal government provides insurance for its employees.)
•Referred to House Subcommittee on Employer-Employee Relations.
H.R. 2073, Small Business Health Insurance Promotion Act
Introduced by Rep. John Barrow
(D-GA), 107 co-sponsors
"To amend the Internal Revenue Code of 1986 to provide tax subsidies to encourage small employers to offer affordable health coverage to their employees through qualified health pooling arrangements, to encourage the establishment and operation of these arrangements, and for other purposes."
(Offering self-employed individuals or any small business owner with 50 employees or less, a tax credit equal to 50 percent of the employer's cost of health insurance coverage.)
•Referred to several House subcommittees, but yet to receive a hearing.
