[Congressional Record Volume 140, Number 91 (Thursday, July 14, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                WHY SMALL BUSINESSES NEED HEALTH REFORM

                                 ______


                        HON. FORTNEY PETE STARK

                             of california

                    in the house of representatives

                        Thursday, July 14, 1994

  Mr. STARK. Mr. Speaker, there is a common misconception that health 
reform will be detrimental to small businesses. I believe that health 
reform is necessary for small businesses to grow and compete in the 
years to come.
  Small businesses that cannot offer health benefits to prospective 
employees are not able to attract the best candidates, who instead go 
to work for larger firms which provide attractive benefits packages. We 
need to help make small businesses competitive with big firms by 
providing health coverage for small firms.
  Present barriers created by insurance companies, such as countless 
unnecessary forms and regulations, make it difficult for small business 
to find an acceptable, affordable policy. The vast amounts of paperwork 
required by insurance companies helps discourage small businesses from 
seeking coverage and increases health costs for everyone.
  By providing subsidies to small businesses and removing present 
barriers we can help provide small business with affordable, high 
quality health coverage.
  Following is an outstanding letter written by Barbara Davis and Kevin 
Nortness of Emdee Associates, a small firm which provides database 
support to law firms and government counsels. This letter illustrates 
how small businesses will benefit from health reform.

                                                    June 14, 1994.
     Hon. Fortney Pete Stark,
     Cannon House Office Building,
     Washington, DC.
       Dear Congressman Stark: We are a small company which 
     provides database support to law firms and government counsel 
     on the west coast. Recently we learned that our insurance 
     carrier was writing various government officials making the 
     assertion that small business would be ruined by a mandatory 
     health care plan. We want you to know that we strongly 
     disagree with that sentiment.
       In fact, we think that a health care plan that requires 
     employers to offer their workers health care insurance is the 
     only way to level the playing field and get some control over 
     health care and insurance costs. We would like to tell you 
     something about our experiences in locating and implementing 
     a health care policy and dealing with the insurance industry.
       First, small businesses have real difficulty in locating 
     health insurance providers. Our experience in Oregon and in 
     California has been that health insurance was unavailable or 
     severely limited in its availability to businesses with less 
     than 15 full-time employees (per state, or per location). 
     Only when Oregon's state legislature pushed to require 
     businesses to offer health care as part of the Oregon Health 
     Care Plan did things improve in Oregon. (Our office in 
     Seattle is new, and therefore we can't fairly comment on our 
     experience there.)
       Second, the barriers small businesses confront (when they 
     do investigate health insurance for their staff) often leave 
     owners with the impression that insurance companies have such 
     impossible regulations and requirements that the businesses 
     will be unable to comply or impossibly burdened with 
     paperwork from their insurer.
       Insurers generally do not offer policies which can be 
     framed for a fluctuating staff (meeting the needs of 
     companies with long-term temporary or seasonal staff).
       We were told that insurance companies could not offer 
     quotes on staff of less than 10 in specific office locations.
       Based on our own business's insurance scarch--and searches 
     we have done as a management service for clients--we have 
     come to the conclusion that the health care industry is 
     caught in a bog of its own making, with the result that what 
     lawmakers see and hear from the industry is often confusing. 
     And we suspect that that bog is, to a great extent, the 
     creation of the insurance industry which is so strongly 
     opposed to any change in the American health care system. For 
     example,
       First, the financial management techniques employed by 
     various insurance companies providing services in health care 
     (and other fields) serve to escalate the cost of the 
     insurance service.
       We have experienced instances (both in health care and in 
     other types of claims payment) where there were two and three 
     levels of claims screening, the result of which was to delay 
     payments for many months.
       Payment delays result in the provider increasing fees to 
     cover the lost interest, and
       Payment delays also result in a severe loss of confidence 
     in the whole system, and
       At least in some instances, we believe payment delays 
     contribute to the public rage against insurance providers, 
     which results in added litigation.
       Second, insurance providers' and government forms increase 
     costs and fail to serve the public.
       One result of the plethora of insurance claims forms and 
     reports is that the insured and/or the health care provider 
     is required to spend an inordinate amount of time figuring 
     out what is wanted by the insurance company--resulting in 
     extra calls and questions to the insurance company, errors in 
     claim-making, etc.
       Third, and, we suspect that another goal of the management 
     systems used by insurance companies is to effectively 
     discourage claim-making and/or to delay payment of claims.
       By delaying payment on a $10,000.00 claim for a period of 
     six months, the company can make a fair amount of interest on 
     its invested asset which would otherwise go to pay the claim; 
     and if in the long run the claim has to be paid, the company 
     is all to the good the amount of interest earned for the 
     period that the payment was delayed.
       We also suspect the reasons for the use of the specific 
     language which is employed to deny claims which might later 
     be paid by the insurer--this language often serves to so 
     dissuade the insured party from pursuing a righteous claim.
       We realize that this is a complex issue and that we have 
     not touched on the part of the issue that might be arguably 
     closest to our business--how personal injury and medical 
     malpractice suits fit into the picture--we think that is for 
     another letter.
       What we especially want you to be clear on is that nowhere 
     near all small businesses oppose mandatory health care--we 
     welcome it. Making employer-provided health care nationwide 
     would level the playing field for companies from one state to 
     another, and serve our working public, and get the part-time 
     masses out of the emergency-room syndrome.
       Please feel free to contact either one of us regarding this 
     letter. And again, thank you for your time and efforts on 
     creating a national health care plan which will serve 
     America.
           Very truly yours,

                                          Barbara J. Davis and

                                    Kevin C. (``Casey'') Nortness,
     Emdee Associates.

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