Small Business Health Insurance Bill Before Committee
(Austin) The Senate State Affairs Committee heard testimony on a bill aimed at driving down the cost of group health coverage for small business owners.
Texas leads the nation in the uninsured, but the problem is particularly acute for employees of small businesses. A 2007 report issued by the Texas Department of Insurance (TDI) found that while 89 percent of large firms in Texas offer group health insurance, only 32 percent of small firms, those with fewer than 50 employees, offer health coverage to employees.
This can be attributed to the increasing costs of premiums, which according to the TDI report, have more than doubled in the last 10 years. Small business owners are less able or less willing to pay high premiums; according to a 2004 TDI survey, only 37 percent of these owners are willing to pay more than $100 a month per employee for health insurance.
The report recommended the creation of a reinsurance plan, insuring insurers against overly high claims or a large number of claims. This reduces risk, increases market predictability, and should lead to lower premiums. SB 6, co-authored by Senators Robert Duncan of Lubbock and Jane Nelson of Flower Mound, would create a fund to offer partial reimbursement to insurers for claims made by employees at small businesses.
"There are employed Texans who are uninsured and I think it's time to address this problem," said Duncan. "The legislation provides a great opportunity to for more small business employees and employers to finally have affordable insurance."
SB 6, entitled the Healthy Texas Act, would create the Small Employer Premium Stabilization Fund, funded by the state. This fund would reimburse insurers for large insurance claims made by individuals who have group insurance under the Healthy Texas Act. Insurers would have to pay the first $5000 of a claim, but could seek reimbursement for 80% of the cost of claims ranging from $5000 to $75000.
In order to qualify for the program, a business must not have offered group health insurance to employees in the last year. Thirty percent of employees must be at or below 300 percent of the federal poverty level, and to join the program, 60 percent of employees must agree to purchase the insurance. The bill is estimated by the Legislative Budget Board to cost $122.5 million over the next biennium.
The Senate will reconvene Monday, March 30 at 1:30 p.m.