Battle brewing over health insurance bill backed by small business

Insurance department officials say the plan would undermine the small-group market and leave more people uninsured

0 | Legislature, Insurance

Ken Daniel is a Topeka businessman and advocate for small business.

Ken Daniel is a Topeka businessman and advocate for small business.

Arguments are being honed on whether House Bill 2682 would mean health insurance for more or fewer Kansans.

Hearings have been promised within the next couple of weeks in the House Taxation Committee and supporters and opponents of the bill are already gearing up for battle over what Topeka businessman Ken Daniel calls “the only small business health plan” to be considered by this year’s Legislature.

“This is our only chance this year, really, for small business to improve the insurance situation,” Daniel said.

Daniel and other supporters say HB 2682 would help make insurance cheaper and more available to employees of firms with 20 or fewer workers, reversing a decline in the number of Kansans who get help from employers when it is time to pay for health insurance.

The bill would allow employers who don’t already offer a group plan to contribute to the premium payments a worker makes on an individual health insurance plan. It also would require health insurers to offer the option of a high deductible plan coupled with a Health Savings Account.

Similar provisions were included in Senate Bill 81, a major health reform bill signed into law with fanfare in 2008.

Conflicting laws

But Daniel said the pertinent small business provisions in the 2008 bill never came to fruition because the Kansas Insurance Department later found that they conflicted with the state’s small group insurance laws.

HB 2682, he said, will eliminate those conflicts and let the expected proliferation of individual policies and so-called 125 plans begin.

The bill will be opposed by the Kansas Insurance Department, according to Assistant Commissioner Bob Tomlinson, because if it becomes law it would undermine the small-group market and make it difficult or impossible for people with health problems to find or keep affordable coverage.

“What we’re opposed to is this employer contribution to individual policies,” he said. “The department has no problem with trying to encourage people to be responsible for their own insurance, particularly high deductibe, HSA policies should be encouraged.

A shift to individual health policies would mean cheaper coverage for healthy people and could reduce an employer’s costs in the short term, he said.

“But for sick people,” Tomlinson said, “they’re not going to get an individual policy (that’s affordable) so you increase the number of uninsured. It doesn’t matter if you’re an employer contributing to an individual’s policy, if the person you’re giving the help to can’t get health insurance.”

Daniel said the number of workers covered by small-group plans has been in steady decline regardless.

“Sandy Praeger (Insurance Commissioner) says she’s afraid it will weaken the small-group plans,” he said. “I’m sorry, but we’ve gone from 62 percent to 42 percent of small employers offering health insurance since we put this small-group crap in the law, so sticking with small groups just means fewer and fewer people insured if they work for employers with less than 20 employees.”

Tax breaks extended

Tomlinson said he has met with Rep. Arlen Siegfried, R-Olathe, a member of the House Taxation Committee and a key supporter of the bill, and has spelled out the department’s objections.

Daniel said the bill also would level the playing field for people buying insurance through individual plans.

Currently, people who pay into employer-sponsored group health insurance plans are able to deduct their premium payments from gross income tax declarations. That tax benefit is not open to people paying for individual insurance plans. HB 2682 would allow the purchase of individual plans with pre-tax dollars.

“Right now, the little guy, especially one on an individual policy, can’t get any tax breaks,” Daniel said.

Insurance department officials said they don't track how many Kansans are covered by individual health insurance plans versus those covered by small-group plans.