Pressing the White House on health reform: Small business, high-risk pools

Oct 29, 2009 12:39 PM

Small businesses face the same kinds of problems buying health insurance as individuals do: premiums that rise sharply if anyone gets sick, high administrative costs, and all-round insecurity.

In my conversation with Nancy-Ann DeParle, director of the White House Office of Health Reform, I brought a question from a reader named Roland: "How will this help a small-business owner? I have two employees in addition to myself. Health-care costs are draining my business." (View a story about a small-business owner and a ski-industry worker).

DeParle responded that health reform will be a "win-win for small business." All the bills under discussion in Congress include tax credits to help businesses with up to 50 employees buy coverage on the national health exchange. Moreover, unlike larger business who would (under the House legislation, at any rate) be required either to provide coverage for workers or pay into a national kitty, small business would be exempted from this so-called "pay or play" rule.

And, she added, buying coverage on the exchange "will be substantially less expensive for small business" than the health plans they can buy today. "If you’re four people … and one of you has a baby or gets sick, the insurance company is going to jack up your rates next year," she explained. "They have to cover their costs. … If we pool over a larger group they can set rates that are much more affordable."

Other savings will occur because the companies will no longer have to look into the health histories of employees; medical underwriting, as it’s called, will be outlawed in the exchange so there will be no reason to do it.

I also asked DeParle about an issue that has been bothering us here at Consumers Union throughout the legislative season. In all the legislation, the major reforms—the exchange, the affordability subsidies, the outlawing of medical underwriting—don’t happen until 2013.But what happens to people who need help right now like Rick Cristo, whose COBRA is running out any day now but who can’t find replacement insurance because of a pre-existing condition—prostate cancer?

"You can see why the President feels such a sense of urgency about getting this done," DeParle said. While it will take a few years to set up the exchange and the other big reforms, he proposes to set up a temporary national high-risk pool to help people like Cristo. This would be a plan that people could buy into if they couldn’t get coverage on the private market because of pre-existing conditions, and it would include subsidies to help make the plans more affordable.

"Within the next year after the bill is signed, we want to get this up and running," she said. While 34 states have high-risk pools today, DeParle said a national pool will be "more cost-efficient for everybody."

—Nancy Metcalf, senior program editor

Take a look at more from our health-care reform interviews with Nancy-Ann DeParle, the director of the White House Office of Health Reform.