Small Businesses Need Health Insurance Reform That Works. Will They Get It? Part 3

So, Mr. President and members of Congress, if you want to take some steps toward fixing small group and individual health insurance, here’s what to do:
1)…Take active steps to encourage the formation of large, non-profit health insurance purchasing co-operatives, and explicitly open them up to small companies and self-employed individuals;
2)…Conduct a top-to-bottom review of the pricing and underwriting rules imposed on the small group and individual health insurance markets by state and federal regulations, and repeal those which do not explicitly contribute to broadening the risk pool;
3)…Establish a series of pilot projects which will encourage insurers to use information technology to increase the efficiency of their small group and individual health plan marketing efforts, and;
4)…Give insurers five years to reduce their administrative cost ratios to not more than 12 percent of premiums for small groups, and not more than 15 percent of premiums for individuals.
The combination of these efforts would create incentives for insurers to work with private aggregators to take advantage of economies of scale to reduce administrative costs, bring down prices, and make health insurance more affordable to more people.
If the marketplace hasn’t improved markedly over a five-year period, a public plan would be enacted, run on principles similar to FEHBP, and administered by insurers who prove they get it.
Absent reforms that look a lot like these, a mandate on individuals or employers would, indeed, force the formation of a public option, because the price of private health insurance will continue to skyrocket, and more small employers and individuals will be priced out of the health insurance market.