Health benefits fare well in study

Md. doing better job than some in insuring small-business staffs

February 27, 2002|By Andrea K. Walker | Andrea K. Walker,SUN STAFF

Maryland is doing a better job than much of the nation in increasing the numbers of small-business employees with health insurance, but the state's families are also paying more for their benefits, according to an independent study presented to a House committee yesterday.

About 57 percent of Maryland small businesses, those with fewer than 50 employees, offered their workers health insurance in 1999, the latest year of available figures, compared with a national average of 47 percent.

Maryland families paid an average of $6,785 in premiums, which was 11.9 percent higher than the $6,062 U.S. average. An individual paid an average $2,735, or 10.3 percent more than the national average of $2,475.

The Maryland Health Care Commission, which monitors the state's small business insurance program, presented the findings to the House Economic Matters Committee yesterday. The commission hired Washington-based Health Management Associates to conduct the study at the request of state legislators, who wanted to compare the program with those of other states.

The study compared Maryland with the entire United States as well as with six individual states that had similar programs - New Jersey, Delaware, Virginia, North Carolina, Florida and Colorado.

Despite the premium costs, the study's authors said, Maryland's program is performing well.

"The system is not broken," said Elliott Wicks, who conducted the study for Health Management Associates. "It needs some minor tweaks, but it is not broken."

When differences in types of benefits were factored into premium costs, Maryland did better than most of the six states it was compared with, Wicks said.

The study's author found that Maryland is facing some of the same obstacles as many other states. For instance, the number of insurers offering coverage to small employers has decreased over the years, hindering competition and driving up costs.

In Maryland, 23 insurance companies offer coverage through the state program, and two of those control about 70 percent of the small-business market, Wicks said during the hearing.

There is also a problem with employees jumping into a health-care plan when they need an expensive surgery or other procedure, then dropping out of the plan when the procedure is completed.

"It gives us a very high risk pool and drives the cost up," said committee chairman Michael E. Busch, an Anne Arundel County Democrat.

Wicks said there is little the state can do to lower premiums, because rates in Maryland are driven by a nationwide increase, by as much as 20 percent.

But Del. Van T. Mitchell, a Charles County Democrat who introduced legislation last year to have the study conducted, said he wished it had offered more solutions, particularly on how to encourage more insurers to participate in the program and how to lower premiums.

"We're very concerned about the lack of interest by insurers wanting to offer the plan," Mitchell said.

"The study addressed the fact that everyone that has small group insurance has faced this similar problem, and that there is a similar trend going on. The question is how can we effectively draw other companies in?"

Mitchell said he plans to try to make some legislative changes to the program.

Barbara McLean, executive director of the Health Care Commission, said her group will look at limiting enrollment of the self-employed to once a year to prevent people from jumping in and out of the program.

The General Assembly passed legislation eight years ago to make health insurance more accessible to small businesses.

The legislature was prompted to act because insurance companies had been turning down small companies or charging higher premiums for policies they regarded as risky and unprofitable. At the time, three-quarters of the 650,000 uninsured Marylanders worked in small businesses or were dependents of those who did.

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