[Congressional Record Volume 151, Number 104 (Wednesday, July 27, 2005)]
[Extensions of Remarks]
[Page E1635]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               SMALL BUSINESS HEALTH FAIRNESS ACT OF 2005

                                 ______
                                 

                               speech of

                        HON. DENNIS J. KUCINICH

                                of ohio

                    in the house of representatives

                         Tuesday, July 26, 2005

  Mr. KUCINICH. Mr. Speaker, I thank Mr. Miller for his leadership on 
this bill. Mr. Speaker I rise in strong opposition to H.R. 525. 
Association Health Plans cherry-pick. They lower standards of care. 
They fail to reduce the growing ranks of the uninsured. But I would 
like to focus on a critical shortfall we don't often hear much about: 
Efficiency.
  AHPs fail to address the white elephant in the living room. One of 
the biggest reasons that America's health care costs are so high is 
that we pay far more for administrative costs in privately administered 
health plans than other industrialized nations. The average private 
health plan puts 12-15 percent--sometimes as high as 30 percent--of 
your health care dollar to administrative costs. AHPs would not only 
fail to address this problem, but could make it worse.
  In fact, a study by human resources consultants, William Mercer, Inc. 
found that ``... the potential administrative cost increases typically 
would exceed the potential administrative cost savings. We estimate 
that the additional costs for small firms who buy AHP coverage 
typically would range from 1.5 percent to 5 percent of premiums.'' That 
is above and beyond the average administrative costs of 12-15 percent.
  Now contrast that with the overhead costs of Medicare, whose 40th 
birthday we celebrate this week. On average, Medicare's administrative 
costs are 2-3 percent. That means that Medicare is about 5 times more 
efficient than private health plans and could be 7 to 10 times more 
efficient than AHPs.
  Health care costs are dragging small businesses down in their efforts 
to compete with their counterparts in other nations where health care 
is universal. It is time to stop dancing around the margins of reform 
by proposing more of the same inefficiencies. We already know what 
works. Lets expand Medicare to all.

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