A chance to level the playing field

published May 1, 2008
in the Connecticut Post

Everyone knows that individuals and small employers face crushing health insurance costs when they try to buy coverage on their own. But state legislators in Hartford are about to take a simple yet far-reaching step to address the problem.

By allowing municipalities and small businesses to buy into the group plan currently provided to state employees, the recently introduced Connecticut Healthcare Partnership would give working families the clout they need to negotiate a better deal for health insurance.

The reason big retailers like Wal-Mart can push down prices is that it uses the clout of its thousands of stores and millions of customers to demand deep discounts from the companies it buys from. The Connecticut Healthcare Partnership would operate on a similar principle. By expanding the clout of individuals to collectively demand that insurance companies lower prices and improve service, the plan would make what's "good for business" good for families, too.

The Connecticut House of Representatives last week passed the Connecticut Healthcare Partnership. By pooling small businesses together with nonprofits and state and local employees, the partnership proposes to increase the bargaining power of all parties in the pool and foster greater competition among insurance companies. If the state Senate and Gov. M. Jodi Rell follow suit, employers will be able to provide their employees with more extensive coverage with lower premiums, deductibles and co-pays. It would be a
boon for small businesses and workers alike.

With more than 200,000 members, the state employee plan already bargains with the health insurance industry for steeply discounted rates. Expanding its membership to include small businesses and other employers will not only help those joining the group plan, but will give the state employee pool the leverage to demand even better deals. Already, the state has negotiated a 0 percent increase in rates for next year and saved $54 million. You'd be hard-pressed to find a small business or town office in Connecticut that has been able to negotiate a 0 percent increase for quality employee health insurance.

To the contrary, small businesses and families in Connecticut are reeling from the spiraling cost of health insurance. In 2005, family coverage rates in Connecticut were sixth-highest in the country. From 2000 to 2006, family rates spiked by 77 percent while median household earnings climbed a mere 13 percent. Health insurance costs are crowding out wages, leaving families with fewer resources to combat the rising price of food, gas and education. Of course, the gigantic health insurance companies and their lobbyists oppose legislation to fix this problem. After all, it is a threat to their profits.

Close by in Pennsylvania, news that one of the state's largest insurers, Highmark, posted a $3.5 billion surplus has stunned advocates for affordable health care. According to the National Association of Insurance Commissioners, this surplus is 3.5 times more than what is needed in the event of unforeseen medical claims. Nationwide, the health insurance industry has more than $600 billion in retained surplus, money the industry holds onto each year and goes to great lengths to protect.

In 2006, the health insurance industry contributed $33.5 million to candidates for state legislatures. The same year, the industry spent $133 million lobbying Congress to beat back sensible health-care reform, second only to the $182 million spent by the drug industry. The dirty secret is that, like their excess profits, those lobbying dollars are fueled by our skyrocketing health insurance premiums.

If the status quo persists, the health insurance industry will continue to use its clout to muscle ever-higher premiums, deductibles and co-pays from small businesses and families who do not have leverage to push back — all in pursuit of ever-higher profits.

Connecticut's state Senate must defy the insurance lobby and enact the Connecticut Healthcare Partnership. By giving small businesses, local communities and employees the clout they need to push back and negotiate real value for their health-care dollar, it would set an important precedent for health care reform across the country. In Connecticut, as in the rest of the nation, the bargaining process has been tilted toward the interests of profiteering health insurance companies for far too long. This legislation is a crucial first step toward leveling the playing field.

Adam Thompson is the Senior Health Care Policy Specialist with the Progressive States Network, a nonprofit group that works to implement state-level policies that advance the interests of working families.