Policy Documents

Health Insurance Reform Act for Small Business Coverage

August 12, 1999

In this model legislation for small business, the bill's aim is to, 

...reform the small group health insurance market so as to ensure small employers’ access to health insurance at more predictable and affordable rates. Currently, many uninsured are employed by firms with fewer than 5 I people.ALEC’s proposal contains three critical components necessary to reform the small group insurance market. This legislation would make small group insurance portable, renewable, and affordable. Portability guarantees that, once employees have entered the health insurance system, they cannot be canceled even if employment is changed. This means that employees would be guaranteed the right to convert to a permanent individual health insurance plan if they leave their place of employment.

Renewability gwrantees that no small group could be singled out for termination due to health, claim costs...Furthermore, it guarantees that no small group could be singled out for abusive rate increases for high claim costs. This safeguards against the negating of coverage due to health conditions, a problematic occurrence in the small group market. Lastly, this bill achieves affordability by eliminating expensive mandated benefits and enforcing stable rate increases. By enforcing stable rates, the model would discourage practices known as “low balling” and “tier rating. ”