Testifying at a hearing before the House Small Business Committee, PIA member Steven J. Harter said group health coverage is not hard to find, but finding it at a cost that is affordable to small businesses is the major challenge. Harter, an insurance agency owner from Ava, Missouri, recounted that until late last year he owned another company not related to his insurance business.He
said that company merged with a larger organization, partly because of the incredible cost of health insurance for his
employees. A past national president of PIA, Harter was one of five witnesses asked to testify at the committee's legislative hearing entitled, "Expanding Small Business Health Insurance Coverage Using the Private Reinsurance Market."
"The overwhelming driver of insurance cost is the high demand for medical services coupled with the skyrocketing costs of health care, including prescriptions," Harter
said."Today as a nation, we are healthier than ever before.Part of the reason are the advances in medical treatment, which of course add to the cost."
"I do not see that reinsurance will necessarily help curb costs," Harter
said."I see reinsurance as more of a vehicle for availability.I have always been able to find group health insurance, just not able to afford it.I don't get the impression from my clients that they are unable to find coverage." Harter
said that on the broad question of making health insurance more affordable, there are only three broad options - either have the government pay part of the cost, somehow limit the cost of services, or pass more of the cost to individuals (or some combination thereof)."All reinsurance does is redistribute the exposure to loss by the insurance company," he
said."It does not lower the total cost.However, the ability of insurance carriers to lower their overall exposure to loss through reinsurance could result in more companies competing in the marketplace.With more competition, insurance costs could potentially be lowered." Harter
had six recommendations as Congress begins to consider crafting legislation:
1. Consider affordability as the key to availability.
"What we are really discussing here today is how to go about delivering more high-quality health care to people who cannot afford to bear the full brunt of the cost," Harter
said."People who choose to work for America's small businesses should not be less able to have quality health care than people who work for larger concerns.Aside from the issue of basic fairness, such a situation places small businesses at a competitive disadvantage in the marketplace."
"All of us must work together to craft solutions that will expand access to quality, affordable health care to America's small businesses and the people they employ," he
added. Testifying along with Harter at the May 24, 2007 hearing were: Leonard D. Crouse, deputy commissioner of the captive insurance division of the Vermont Department of Banking, Insurance, Securities & Health Care Administration; Patrick L. Collins, vice president and reinsurance underwriter with Munich Re HealthCare; Janet Trautwein, executive vice president of the National Association of Health Underwriters; and Edmund Haislmaier of the Heritage Foundation.