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April 20, 2007
Contact: Tony Wyche (314) 361-4774 or tonywyche@soapbox-pr.com
New Report Identifies Options for
Expanding Health Insurance Coverage for Workers in Missouri
Small Businesses
Missouri Foundation for Health report examines
reforms undertaken in California and Massachusetts; offers
recommendations for Missouri lawmakers
St. Louis -
In an effort to inform the policy discussion regarding the
restructuring of Missouri's health care system, the Missouri
Foundation for Health (MFH) today released a new report titled
"Expanding Insurance Coverage for Workers in Small Businesses:
Lessons from Massachusetts and California" that identifies
key options for expanding health insurance coverage to workers
in Missouri's small businesses.
The report, prepared for MFH by The Urban Institute,
examines the recent health care reforms undertaken in California
and Massachusetts and offers recommendations for Missouri
businesses based on the approaches those two states have adopted.
"Because there is a significant disparity
between the ability of large and small businesses to provide
health insurance to their employees, we wanted to research
policy options that would inform Missouri lawmakers on ways
to expand health insurance coverage for workers in small businesses,"
said Leslie Reed, MFH Vice President for Health Policy. "Based
on lessons drawn from two states that have begun to implement
policy options for small business, this analysis provides
important insight into the benefits and drawbacks of such
state policies."
Among the issues on which the report focused
is the impact of subsidies and mandates on access to health
insurance for small business employees. Subsidies can either
be provided to employers in the form of a tax credit for a
certain share of the employer's cost of providing health insurance
or to individuals in the form of direct resources for the
purchase of insurance. Mandates can either be imposed on employers
by requiring them to contribute toward their employees' health
insurance premiums or on individuals by requiring them to
purchase insurance coverage.
The report concluded that to increase employer-based
coverage among small businesses, the focus should be on increasing
the number of small-business employers offering coverage;
on expanding eligibility for currently excluded workers in
firms offering coverage; and on making coverage options affordable
for low-income workers. These policy goals demand a comprehensive
reform effort that includes purchasing pools, individual and
employer mandates, and income-related subsidies targeted to
individuals.
The report went on to note that "Missouri
policymakers can draw lessons from the way Massachusetts and
California balance these policy tools in order to effectively
expand ESI [employer-sponsored insurance] for small businesses."
It provides the following key conclusions and recommendations
for Missouri:
- Income-related subsidies should be directed
to individuals to reduce the cost of insurance. Subsidies
would decrease as income increases. Individual subsidies
can be targeted more directly to those in need and there
is less risk of displacing existing coverage.
- Subsidies to employers have not proven to
be effective in increasing coverage. They are difficult
to target efficiently (many businesses have both high- and
low-income employees, so subsidies would benefit all income
levels and thus poorly target those in need) and provide
subsidies to employers who are often not well equipped to
be efficient purchasers of insurance products.
- To obtain universal coverage it is necessary
to have an individual mandate. But this also raises difficult
political issues of compulsion and enforcement. In addition,
it is necessary to design a subsidy schedule that makes
coverage affordable for those who would otherwise not choose
to purchase coverage.
- Employer mandates can create a number of
serious problems, including the risk of sharp opposition
from small to medium sized businesses and potential legal
challenges. Both California and Massachusetts use relatively
"light" versions of employer mandates, with Massachusetts
imposing a considerably lower burden than California. If
Missouri were to choose an employer mandate, the authors
suggest moving more in the direction of the path followed
by the Massachusetts reform than the California proposal.
- It is widely regarded that some form of purchasing
arrangement (i.e. a "pool") is necessary. This
reduces both the time costs to individuals and firms in
choosing insurance products but also reduces the administrative
costs faced by small employers in the existing private market.
Fortunately, Missouri has alternative vehicles already in
place that could be adapted to serve this function. These
include the state health employees' plan, the state high
risk pool and the SCHIP program. All are currently actively
purchasing private insurance products for their clients.
This report is the tenth in MFH's Show
Me Series, which includes studies on a variety of health system
issues as well as reports on statewide public opinion polling.
These papers consider topics of significance to Missouri which
have relevance both to other states and to the nation.
A fact sheet for the report is attached with
this news release. For a copy of the full report, visit http://www.mffh.org/Showme10.pdf.
Members of the media can contact Tony Wyche to receive a copy
via e-mail (314-361-4774 or tonywyche@soapbox-pr.com).
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Established in 2000, MFH is the largest non-governmental
funder of community health activities in the state. MFH is
in its fifth year of grantmaking, having issued more than
$200 million in grants and awards to date. It is dedicated
to serving the uninsured, underinsured and underserved in
84 Missouri counties and the City of St. Louis. For more information
about MFH, visit www.mffh.org.
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