BCBSA Senior Vice President Alissa Fox Testifies Before House Small Business Committee On Health Reform Solutions

BCBSA supports action in three key areas: new State Insurance Marts, targeted subsidies, and changing incentives

February 4, 2009

WASHINGTON – Today, the Blue Cross and Blue Shield Association (BCBSA) offered a range of solutions to help small employers offer coverage to their workers.  Alissa Fox, BCBSA SVP, Office of Policy and Representation, testified before the House Small Business Committee and outlined several recommendations including new "State Insurance Marts," providing targeted subsidies to small businesses and individuals, and changing incentives to improve quality and reduce overall healthcare costs.  The committee, chaired by Representative Nydia M. Velazquez (D-NY), held the hearing to examine solutions to rising healthcare costs for small businesses.

"BCBSA strongly believes that all Americans should have health insurance coverage," said Ms. Fox.  "We also believe that finding effective solutions that expand coverage and improve affordability for small employers must be a centerpiece of our nation's efforts to reform the healthcare system – a need only made more urgent by recent economic turmoil."

BCBSA has put forth a comprehensive, five-part proposal – The Pathway to Covering America – designed to build on today's employer-based system to improve the quality and value of our healthcare system while simultaneously extending coverage to all.  In her testimony, Ms. Fox provided the committee with an overview of the challenges facing small businesses and their workers and supported action on a number of fronts to expand coverage and reduce costs, including:

1. Making it Easier to Shop for Coverage through State Insurance Marts (SIMs)

As part of comprehensive health reform, BCBSA recommends legislation to encourage states to establish "State Insurance Marts" (SIMs) to simplify shopping, increase competition among insurers, and help educate purchasers on subsidy options.  SIMs would make it easier to shop for coverage by creating a central point in each state where individuals and small businesses could easily compare coverage options and apply for both coverage and subsidies.

Under the SIM model, each state – building on their expertise as the regulators of the health insurance market today – would develop a central Internet portal listing for all products for sale to individuals and small groups.  These sites could be linked via a national framework and would enable:

• Comparison of all insurance options in a respective state based on key factors, including benefits, price, quality metrics, and provider networks.  Each state would develop easy-to-understand comparison templates to promote transparency and informed decision-making.
  
  
• Real-time price quotes from multiple insurers.  Each state would develop standard applications that individuals and small businesses could use to apply to several insurers simultaneously and to obtain estimated premium quotes instead of completing multiple applications and waiting for each insurer to follow-up.
  
  
• Calculation of any tax benefits and subsidies available or determination of eligibility for public programs.  Enrollees could enter basic financial information, learn about the estimated final cost of coverage (considering any applicable subsidies), and learn if they are eligible for public programs such as Medicaid.
  
  
• Simplified enrollment in the plan of choice.  Individuals and small businesses could easily enroll in coverage online or apply for subsidies directly through interface with the agency verifying eligibility.

BCBSA's SIM proposal would increase competition in the small employer and individual health insurance markets.  SIMs would list all products for sale to individuals and small groups by all insurers in the state and for the first time allow consumers and small businesses to compare all plans in a state on price and other important factors.

2. Targeted Subsidies for Small Employers and Individuals

To help make healthcare coverage more affordable, BCBSA recommends providing targeted subsidies to help those who have difficulty affording insurance.  These include:

• Tax credits for low-wage workers in small businesses;
  
  
• Tax-deductible insurance premiums for those without access to employer-sponsored coverage;
  
  
• A refundable, advanceable tax credit for those whose premiums represent a disproportionate share (e.g., 6 percent) of their income; and
  
  
• A refundable tax credit to help those between jobs.

3. Change Incentives to Attack Underlying Costs and Improve Quality

To assure affordable, high-quality coverage for all Americans, BCBSA advocates changing the incentives in the delivery system to improve quality and attack rising costs.  Misaligned incentives are drivers of healthcare costs.  Today, providers are generally paid based on the number of services they provide regardless of the quality of outcomes.  In fact, approximately 30 percent of all healthcare spending goes toward ineffective, redundant, or inappropriate healthcare.

"We all know there is no simple solution to the nation's healthcare crisis – to improving the quality of care, reining-in rapidly rising costs to keep healthcare affordable and extending coverage to all," said Ms. Fox.  "Improving health insurance coverage for small businesses is a critical step toward expanding coverage to all Americans.  The recommendations I outlined today build on BCBSA's Pathway to Covering America proposal to help achieve this important goal."