Create a Non-Profit Organization to Help Businesses Purchase Cost-Effective Health Care

The Legislature should establish a non-profit organization to help businesses become better purchasers of health care.


Background
Small businesses have complained that they cannot afford to h ave insurance experts on their payrolls to advise them on health care matters; consequently, they are at a disadvantage when dealing with insurers and health care providers. Many solve this problem by not providing health insurance for their employees or d ropping coverage when premiums increase to the point they can no longer afford them. Because the businesses are small, many cannot obtain the discounts from providers negotiated by the managed care programs of larger employers. Small business insurance pre miums are high because insurance carriers must spread their risk and their administrative costs over a small number of people.

The Health Policy Corporation of Iowa (HPCI) was formed in 1982 using federal funds obtained under the Health Planning Act. This non-profit organization holds seminars for small businesses on how to buy health care, negotiate for the best price and quality , join with other businesses to obtain lower health insurance premiums and form a managed care program. HPCI also publishes forms, how-to books, and when asked, will negotiate with providers for a business or group of businesses. HPCI advises the Iowa Legislature on health issues and the formation of a comprehensive health care system.

HPCI is funded by donations and grants from the private sector. It has a full-time staff of four. The HPCI Board is composed of top officials from Iowa businesses, universities, media, organized labor, health providers, state agencies with health care resp onsibilities and the American Association of Retired Persons.

Under HPCI s guidance, small businesses have joined together to form large health care buying groups. Many workers are now covered by health insurance not previously available to them. In addition, HPCI has helped create four health maintenance organizations.

No such organization exists in Texas, but with thousands of small businesses unable to afford insurance, the state could fill a pressing need by starting one.


Recommendation
The Legislature should establish a non-profit organizat ion in the Texas Department of Commerce or the successor agency mentioned in another part of this report. Its primary purpose would be to help businesses become better purchasers of health care. The organization should be made independent of state governme nt after one year. The organization should advise the Governor and the Legislature on health issues and the status of health insurance for small businesses.

The organization also should negotiate with providers for a business or group of businesses upon r equest. It should hold seminars for small businesses on how to buy health care, negotiate the best price and quality, join with other businesses to obtain lower health insurance premiums and form a managed care program. The organization would also publish how-to books on getting the best buy on health insurance.

The board should be composed of top officials from businesses, universities, media, organized labor, consumer groups health providers, state agencies with health care responsibilities and advocacy organizations.


Implications
This recommendation would increase the number of people who could become insured and lower the cost of insurance for employers and employees of smaller businesses. Since more people would be insured, it could also decrease the number of indigent patients a nd Medicaid users, thereby lowering costs for taxpayers and government at the local, state and federal levels.

Since the program would be developed by a non-profit organization, there would be no administrative costs to government. Like most non-profits, it would be funded by grants and donations from foundations and businesses.

The organization would also be a way for government to improve customer service for businesses and taxpayers in the state. It could increase the information available to the public concerning health insurance and health issues.


Fiscal Impact
The organization would be entirely financed outside the State Treasury by grants and donations. There would be no impact on state revenue.