Small Business Health Insurance Now Available at Larger Employer Rates

The Greater Austin Chamber, in conjunction with Texas Coalitions Inc., has created a first-of-its-kind health coalition for small businesses. The Greater Austin Chamber Health Coalitions Program was made possible by the passage of HB 897 during the 2003 session of the Texas Legislature. It allows smaller employers with less than 50 employees to join together to form a coalition group and obtain rates from any small group insurance carrier offering coverage in Texas.

"For years, now we've been told that securing, keeping and paying for health insurance is one of the most difficult problems facing small business," said Bobby Jenkins, President of ABC Pest and Lawn Services and Chamber Vice-Chair for Small Business. "Our task force researched countless plans and programs before deciding that this provides the greatest advantage for our members."

Joining a coalition means risk and costs are spread out among more people in the group. According to Texas Coalitions, Inc., a six-employee business that had been paying about $42,000 per year in health insurance coverage prior to HB 897, received a rate as low as $24,800 annually by joining with six more companies. This resulted in the company saving more than $17,000 in its first year. According to Texas Coalitions Inc., such savings are possible for two reasons: Risk is spread over a larger group and administrative loads are reduced. Insurance companies are permitted to include additional "loads" in the rates for smaller employer groups to cover costs for administering these groups. The highest "loads" are for groups of two to nine insured employees which are as high as 20 percent by law.

There is no guarantee that every business will save money using the health coalition option. Each coalition group chooses the plan and the carrier. Rates will be determined by the group census on age, sex, location, dependents and medical conditions.

"As part of a five lawyer firm, I understand that running a small business can be a challenge," said Chamber Chair Kirk Watson of Watson, Bishop, London and Brophy. "The biggest challenge small businesses face is providing health insurance for our employees. The cost of health insurance impacts every decision we make about hiring. Most employers can obtain lower premiums by joining a coalition instead of purchasing their own company plan. It's a program that should help us create jobs by helping our small businesses control one of their greatest costs."

The Greater Austin Chamber is the first in the U.S. to offer the coalition option to its members, and small businesses that decide to join a coalition will benefit by being a Chamber member. A one-time enrollment fee per employee will be discounted 30 percent and monthly administrative fees per employer group will be discounted 20 percent the first year, with an additional increase reaching 55 percent in the fifth year.

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