[Congressional Record Volume 143, Number 60 (Friday, May 9, 1997)]
[Senate]
[Pages S4267-S4269]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




         EXPANDED PORTABILITY AND HEALTH INSURANCE COVERAGE ACT

  Mr. HUTCHINSON. Mr. President, yesterday, I introduced legislation 
that I believe is desperately needed by millions of uninsured Americans 
who are employed by small businesses.
  The problem of the uninsured--both children and adults--is largely a 
problem of small businesses lacking access to affordable health 
insurance.
  When I first came to Congress in 1993 on the House side, health 
insurance coverage and accessibility was at the forefront of public 
debate. This year, it seems as if all of the attention is focused upon 
health insurance coverage for children--a very important topic indeed.
  If we can provide access for millions of adults in this country, we 
can extend access to health care for millions of children. We know that 
there are more than 40 million uninsured Americans, and that 10 million 
of those 40 million Americans are children. It is these children who 
are the most vulnerable in our society. If we do not provide these 
children with quality health care in their early years, we will find 
the cost of providing health care for them as they grow older to be 
ever higher. Not providing quality health care for our children 
translates into higher health costs for all of us.
  A closer examination reveals that 80 percent of these individuals--
that is the 40 million who are uninsured--live in families with an 
employed worker who is likely to work for a small employer, or who is 
self-employed. That is, they are drawing a paycheck. And, yet, they 
don't have health insurance.
  In fact, only 26 percent of the workers in companies of 10 employees 
or less receive health insurance through their employer, while nearly 
all workers in Fortune 500 companies have health insurance available to 
them. This, of course, is because many small employers simply cannot 
afford high health premiums and the high administrative costs 
associated with health insurance today.
  So, if you work for a small business with 10 employees or less, the 
odds are three to one that you don't have health insurance.
  If we can solve this problem so that millions of Americans who are 
working for small businesses can obtain health insurance, we will have 
taken a huge step toward providing health insurance for all Americans.
  According to a February General Accounting Office study, while many 
employers remain committed to providing employee and family coverage, 
the percentage of people with private coverage is declining in America. 
At the very time that we want to expand health insurance for millions 
of children in this country, at the very time that we have a goal of 
providing universal health coverage to all Americans, we are finding 
that the percentage of people with health coverage is declining. One of 
the primary reasons for this decline is eroding financial support. Each 
year between the late 1980's and 1994, increases in employers' cost to 
provide health insurance to their employees and their employees' 
families outpaced inflation, with cost growth of 18 percent in one 
single year.
  With the surge in health insurance premium costs, many employers have 
reevaluated their commitment to provide health coverage to employees 
and their families. It is understandable. With health care inflation, 
increasing at as much as 18 percent a year in certain instances, it is 
little wonder that employers are reevaluating whether they are going to 
be able to afford to provide health coverage to their employees and to 
their employees' families. Some employers--particularly smaller 
employers--have dropped their health care coverage altogether. Many 
employers that have chosen to continue to offer benefits, have been 
forced to raise employees' premiums, creating more out of pocket 
expenses for their employees--which is essentially a pay cut.
  The percentage of Americans with private health insurance dropped 
from 75 percent in 1989 to 71 percent in 1995. During the same time 
period, private health insurance coverage for children under the age of 
18 decreased from 73 percent to 66 percent. If private coverage levels 
had not decreased, it is estimated that about 5 million more children 
and 5 million more adults would have private health insurance.

  To my colleagues, I say that we are actually losing ground in our 
efforts to provide health insurance for all Americans.
  Small employers also cannot afford costly State mandated benefit 
requirements, which studies show can add up to 30 percent of health 
care costs. According to a December 1996 study by Blue Cross-Blue 
Shield, the number of State mandated benefit requirements has soared 
over the past 20 years. For example, the State of Florida had enacted 
only two insurance related mandates in 1976. In just 20 years, the 
number of State insurance mandates in the State of Florida has 
increased to 36. In my home State of Arkansas, the number has more than 
quintupled over the same 20-year period. State mandates are increasing 
exponentially all over the Nation.
  It is important to realize that while the number of people with 
private insurance has declined, the number of people with Medicaid 
coverage has increased. Unless the decline in private coverage abates, 
taxpayers may face increased costs for health care as we see more and 
more people enroll in the Medicaid system.
  The Expanded Portability and Health Insurance Coverage Act, which I 
introduced yesterday, will help alleviate the problem of the uninsured 
by removing barriers that prevent small businesses from providing 
health insurance to their employees. Most small businesses want to 
provide these benefits, but they find that there are innumerable, 
costly barriers that prevent them from doing so. This legislation will 
give associations and franchise networks the opportunity to form 
multistate purchasing groups under a single set of national rules, 
through the Employment Retirement Income Security Act, ERISA. The EPHIC 
bill will make health insurance more affordable for small employers in 
several important ways.
  First, it will lower administrative costs. Second, it will provide 
greater bargaining power to smaller employers to negotiate better 
agreements with health plans and providers. Finally, it will eliminate 
the need for small businesses to comply with costly State-mandated 
benefit requirements which, as I mentioned, studies indicate amount to 
30 percent in additional cost.
  To put this in this perspective, just last week, a constituent came 
into my office and told me the following story. He is an employer with 
about 150 employees in Little Rock, AR. He shopped

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around for health insurance for his employees, and generously agreed to 
pay 90 percent of their health insurance premiums. Just last year, he 
was faced with a 25-percent increase in his health care costs--a 25-
percent increase. Now, his only choices are to drastically decrease the 
amount of benefits provided to his employees, or raise the premiums for 
his employees and the portion they pay, or, as so many small businesses 
are doing today, drop coverage altogether.
  The EPHIC bill will help millions of employers who, like my 
constituent in Little Rock, AR, really want to provide health benefits 
to their employees.
  While expanding insurance coverage to American workers and their 
families, the EPHIC bill also contains important consumer safeguards 
that would apply to multigroup plans that self-insure. They include 
mandatory stop-loss insurance, reserve requirements, solvency 
indemnification standards, and strict fiduciary responsibilities, and 
nondiscrimination requirements.
  The EPHIC bill is supported by a broad coalition of over 100 
organizations, and has bipartisan support in both the House of 
Representatives and the Senate. There are over 100 cosponsors of this 
bill in the House of Representatives.
  I am very pleased that Senator Lott, Senator Hollings, Senator 
Brownback, Senator Roberts, and Senator Landrieu have joined as 
original cosponsors of this very, very important legislation.
  I urge the rest of my colleagues to join in support of this 
legislation as well.
  Thank you, Mr. President. I yield the floor.
  Mr. HOLLINGS. Mr. President, last Congress we were able to enact some 
important reforms to greatly improve access to health care for millions 
of Americans. The Kennedy-Kassenbaum Health Insurance Portability and 
Accountability Act improved the insurance marketplace so workers with 
preexisting medical conditions or who were at risk of losing health 
insurance when they changed jobs are more likely to have coverage.
  We were successful because we applied certain principles learned in 
the experience with President Clinton's Health Care Security Act. In 
the Senate, we worked in a bipartisan manner to fix a targeted number 
of our Nation's problems in a way that does not completely overhaul our 
current health care system. Because we did not fix the whole system, 
there is still work to be done. Today, Senator Hutchinson and I are 
proposing the next step in an incremental approach. We hope that the 
Senate can continue to work in a bipartisan way to achieve additional 
reforms to improve our citizens' access to what many say is the finest 
health care system in the world--if you have a ticket to get in.
  The Expanded Portability and Health Insurance Coverage Act that we 
introduced yesterday focuses on improving the health insurance market 
place so that workers in small businesses and their families can enjoy 
the health benefits and freedom from fear of a catastrophic illness as 
employees of large businesses.
  Many of us are greatly concerned about the 40 million or so Americans 
who currently have no health insurance, 10 million of them children. 
Looking closely at the problem, you see that over 80 percent of those 
uninsured live in a family with an employed worker who is likely to 
work for a small employer or be self-employed. Only 26 percent of 
workers in companies of 10 or less employees get health insurance 
through their employer, while virtually all workers in Fortune 500 
companies do so. This leads to the inevitable conclusion that, in order 
to get a handle on the problem of the uninsured, we have to address the 
health insurance marketplace for small employers.
  A recent study by the National Federation of Independent Businesses, 
entitled ``Small Business Problems and Priorities,'' ranked the cost of 
health insurance as the No. 1 problem that small businesses face today. 
The great majority of small business owners want to provide coverage 
for their workers and families but they do not have affordable coverage 
options currently available to them.
  Our bill seeks to address this problem by allowing small businesses 
to form multi-state purchasing groups under a single set of national 
rules. This is done through the Employee Retirement Income Security 
Act. Such a change in law will make health insurance more affordable 
for small businesses in several important ways:
  First, it will lower the administrative costs of health care coverage 
for small employers,
  Second, it will give greater bargaining power to small employers so 
they can negotiate better deals with the health plans and providers, 
and
  Third, it will eliminate the need for small businesses to have to 
comply with some costly benefits mandated in some States.
  Administrative costs account for nearly 30 percent of health 
insurance premiums, so lowering administrative costs will result in 
decreased premiums. A study by the Congressional Research Service and 
the Ways and Means Committee of the House of Representatives shows that 
the administrative costs of insurance for small employers are up to 30 
percent higher than for large employers due to the fact that it costs 
insurers and health plans more to market to these small groups. The 
per-person cost of processing claims and the general management of 
benefits is also much higher. Costs are dramatically lower for larger 
groups. Allowing small employers to form large groups will result in 
lower administrative costs.
  The bill, in permitting the formation of multi-state purchasing 
groups under ERISA, will give small employers much greater purchasing 
power than they have under current law. It will be far easier and safer 
for the small businesses to self-insure through a purchasing group. 
Enabling small employers to do this will give the groups the 
opportunity to get better value for each health care dollar spent. They 
will be able to act like large employers and directly contract with 
health plans and providers. In negotiating with health plans and 
providers like larger companies, they will be able to actively 
negotiate lower prices in exchange for a large group of users. This 
will make health insurance more affordable.
  That mandated benefits significantly add to the cost of providing 
health insurance was documented in an August 1996 GAO Report, ``Health 
Insurance Regulation, Varying State Requirements Affect the Cost of 
Insurance.'' Also, a study by the NFIB Education Foundation shows that 
State-mandated benefits can add up to 30 percent to the cost of health 
insurance premiums. Essentially the bill levels the playing field so 
that small employers can operate health plans under the same set of 
rules as large employers. Allowing small businesses to operate under a 
single set of national rules will eliminate the need for such groups to 
have to comply with each State's list of rules regarding benefit 
packages, claims and solvency. Instead, the groups will need to follow 
one set of rules under the ERISA. The rules are changed so that 
consumer protections and safeguards will apply to these multi-state 
purchasing groups. For example, only a legitimate association that is 
certified by the U.S. Department of Labor could become a purchasing 
group. They are subject to strict standards concerning sponsor 
eligibility, nondiscrimination, fiduciary, solvency, reporting, 
disclosure and plan termination standards. States would be permitted to 
enforce these Federal standards.
  While it is difficult to predict exactly how much coverage will 
increase through this legislation, at a hearing held by the House 
Education and Workforce Committee last year, the National Business 
Coalition on Health and the National Association of Manufacturers 
predicted about 20 million uninsured adults and children could be 
covered as a result of this legislation. The Employee Benefit Research 
Institute estimates that 55 percent of uninsured children have a parent 
who works full time for the entire year. So a great majority of the 
uninsured children are likely to benefit from this bill as well. And, 
the beauty of this legislation is that it enables millions of currently 
uninsured people to have health care through the private sector, so no 
new entitlements involving huge costs to the Government are involved.
  The Expanded Portability and Health Insurance Coverage Act gives us 
an opportunity to enact essential reform to strengthen our current 
health care system. It is an important step forward in

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the effort to find solutions to our Nation's health care problems and I 
encourage my colleagues to support this legislation.
  Mr. LEAHY addressed the Chair.
  The PRESIDING OFFICER (Mr. Allard). The Senator from Vermont.
  Mr. LEAHY. Mr. President, I would like to take 10 minutes under the 
procedure that we now have, and I do not expect that I will require 
more time than that. If I do, I will take a few minutes off the bill on 
this side.
  The PRESIDING OFFICER. The Senator has that right.
  Mr. LEAHY. I thank the Chair.

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