SHOP for This? I Don't Think So!

A number of issues are swirling around Capitol Hill, but the one getting the most attention is health care. Speaker Nancy Pelosi wants a health-care bill on the floor of the House of Representatives by the end of July. A myriad of bills on this issue have been introduced recently. Like most things in Washington, DC, they all sound good on the surface. But the devil, as always, is in the details.

One new piece of legislation that caught my eye is the Small Business Health Options Program Act, or the SHOP Act. At first glance it looks like something that would help small businesses with one of their toughest challenges--providing affordable health care for their employees.

The SHOP Act may sound good, but it gives too much authority to the federal government and does nothing to address the rising cost of health care.

Under this bill, the U.S. Department of Health and Human Services would administer a health insurance program designed for small businesses and self-employed individuals to purchase health insurance through state and national insurance pools. HHS would work with the National Association of Insurance Commissioners to establish benefits requirements and methods for setting premiums, and managing all the benefits contracts with insurers.

Specifically, the bill does not fix the flawed policy that requires health insurers to charge the same premium to everyone regardless of health status or expected health care costs. This faulty policy forces healthy people to subsidize the health-care costs of unhealthy people--even in very small group markets. The result is an overall increase in the price of insurance, which compels more people (especially low-income people) to go without insurance at all. Or worse, it creates an incentive for employers not to hire people with medical problems.

A better solution would be to create a system of portable, personal health insurance, which employees could purchase to suit their own individual health needs. Employers could make variable contributions based on the individual circumstances (especially for the chronically ill), and workers could take their health insurance with them from job to job.

The SHOP Act is interesting because of the way it would have the federal government contract with private insurers to provide insurance. It significantly increases the degree to which the federal government controls health decisions for individuals and families, and takes us farther down the road to nationalized health care. We only have to look as far as Canada to realize that nationalizing health care doesn't work.

Small business owners always tell me that something needs to be done to make health care more affordable and available to small business employers. They are bracing for higher costs again this year. According to a survey by consulting firm Towers Perrin, businesses will spend $9,552 per employee in 2009. As costs go up, many employers will find it difficult to provide coverage, and many will feel the pressure to scale back or eliminate benefits to avoid laying off workers.

Unfortunately, the SHOP Act isn't the only challenge we are facing when it comes to health-care reform. Just last week congressional Democrats introduced legislation that would mandate employers to give workers seven paid sick days a year. Their logic? Unless we have mandated time off, people will come to work with the swine flu.

The bill, HR 2460, has 100 co-sponsors. The House Education and Labor Committee has scheduled a hearing on the bill this week. It's been introduced before, but this time it's likely there will be a big push to include it in the health-care reform package that President Obama wants to sign this year.

The bill's logic isn't sound. It suggests that employers and employees can't determine when they should stay home. It's the wrong approach and should not be added to health-care reform.

Health care is going to be debated in Congress throughout the summer. There's a lot at stake, and the focus of the debate is whether or not we want to have a government-run system. I hope we can broaden the debate and focus on some other ideas, such as:

• Controlling costs. In a meeting with the president this month, key health-care groups pledged to slow the growth of health-care spending by 1.5 percent a year over the next 10 years, at an estimated savings of $2 trillion. This is a good first step because any health care plan must address the rising cost of care.
   
• Making health care portable. We can't ignore health-care portability. I will say it over and over: We need to give employees the ability to carry their health insurance from job to job. Current laws mandate that employers purchase group health plans with pre-tax dollars, so any employer who wanted to purchase an employee-owned plan that was transportable between jobs would have to pay for it with after-tax dollars. Similarly, some states have even passed laws that say employers cannot pay any portion of the premiums on employee-owned health plans without being subjected to group plan regulations. This has to change. Portability must be part of any reform proposal.
   
• Providing incentives. Health Savings Accounts allow individuals to control more of their health spending in ways that suit them best, and the government should consider efforts to make the laws regulating HSAs more flexible. Additionally, health-care providers should be given the opportunity to come up with innovative ways to offer patients low-cost, high-quality health care. Small businesses are bracing for proposed increases in income taxes on top income brackets, which will affect their bottom line and make it more difficult to provide health benefits.

Health care will remain one of the biggest issues facing small businesses for years to come. The next few months will be critical in deciding whether we turn our health-care system over to the federal government to run, or have real reform that will increase quality and access while decreasing costs.

As this debate continues, everyone's voice needs to be heard, so we can get health-care reform that actually works for families and small businesses.