PROGRAMS TO IMPROVE HEALTH INSURANCE ACCESS FOR SMALL BUSINESS:
                   What Works and What Doesn't

       by Zachary Dyckman, Ph.D., and Joanna Burnette
       Center for Health Policy Studies, Columbia, Md.
           Completed under award no. SBA-5652-OA-90

PURPOSE

Small businesses face substantial cost and other barriers in
obtaining health insurance coverage for their employees.  An
analysis of data from the Current Population Survey, performed by
the Bureau of the Census, indicates that 28 percent of workers aged
18-64 who are employed by firms with fewer than 25 employees had no
health insurance coverage in 1989, compared with 8 percent for firms
with 1,000 or more employees.  This study was commissioned to
identify and examine strategies that are proving successful in
increasing health care coverage for small business employees.


SCOPE AND METHODOLOGY

The study identified and reviewed the characteristics of 27 programs
that have been successful or show promise of success in expanding
health insurance coverage for small firms.  Case studies were
conducted for each of these programs covering benefit structure and
premiums, administration and marketing, enrollment, and lessons
learned.  The programs reviewed include those funded by the Robert
Wood Johnson Foundation as part of its Health Care for the Uninsured
Program; state legislative initiatives; products specifically
designed for uninsured small businesses, developed by Blue Cross and
Blue Shield plans; programs implemented through trade associations;
and model legislation to improve access, developed by the National
Association of Insurance Commissioners.

Program strategies include improving the information available to
employers regarding insurance policies, eliminating mandated
benefits requirements for policies sold to small businesses, using
significant cost sharing and provider discounts to reduce premium
rates, adopting group purchasing arrangements, using managed care
programs, restructuring insurance regulations relating to
underwriting practices, and other initiatives.


HIGHLIGHTS

High cost was consistently identified by program developers as the
most important reason why small firms do not provide health
insurance for their employees.  Even when the higher marketing and
administrative costs associated with providing coverage for small
businesses were eliminated--as in many of the case studies--the
researchers found that many small businesses that did not already
have health insurance did not purchase coverage.  The case studies
suggest that significant insurance premium subsidies may be required
to lower premiums enough for small businesses currently without
insurance to provide coverage for their employees.

Successful program initiatives for improving small business access
to health care had the following characteristics in common:

o    attractive benefit designs that were similar to a
     traditional benefit plan,
o    managed care and lower than prevailing provider
     rates,
o    aggressive and creative marketing,
o    substantial community support, and
o    relatively low employer premium rates.

The review of private and public sector initiatives to improve small
business access to health insurance coverage has identified a number
of programs that work.  These programs have achieved significant
enrollment among firms that previously did not provide insurance
coverage for their employees.  The descriptions of the program
features in the body of the report and in the case studies can help
in designing expanded initiatives at the local, state, and possibly
national levels to facilitate increased insurance coverage among
small businesses.

For more information, contact Advocacy's Office of Information at
(202) 205-6531.

Ordering Information

The complete report is available from:
National Technical Information Service
U.S. Department of Commerce
5285 Port Royal Road
Springfield, VA 22161
(800) 553-6847

Order number: PB92-183607
Cost: Pending

SOURCE: Small Business Administration

UNICOM Information Services