Group Purchasing Arrangements

The Small Employer Health Insurance Purchasing Group Act of 2001 allowed the formation of health insurance purchasing groups for the purpose of buying health insurance. This legislation allows health insurers to offer options to consumers participating in the purchasing group that include all, some, or none of the Arkansas coverage mandates and contains some actuarial protections to minimize the concern of anti-selection.

On January 1, 2005, the first health insurance purchasing group in Arkansas was initiated. Administratively housed within and sponsored by the North Little Rock Chamber of Commerce, businesses with fewer than 100 employees and not currently offering health insurance who band together may negotiate coverage with health insurance carriers.

PacAdvantage Health Plan was a purchasing alliance, which allowed small businesses and self-employed individuals to buy insurance in California. PacAdvantage offered affordable combinations of health insurance plans for businesses based in California with 2-50 employees. PacAdvantage ceased all coverage December 31, 2006.

In 2001, Kansas implemented a small employer pooling mechanism called the Kansas Business Health Partnership. The pool, a non-profit organization, purchases coverage via the private market with the goals of employee choice, minimized administrative costs, and benefits that meet standards of federal and state law. The original legislation would have made subsidies available for low-income workers to purchase health insurance through the partnership, but budget difficulties delayed the subsidy. In 2005, the Kansas Legislature authorized $500,000 for subsidies.

The original partnership has been dissolved and will be reorganized under the leadership of the Kansas Business Health Policy Committee (BHPC). The BHPC has issued an RFP for carrier participation. Two carriers bid for the pilot program through a bid process that closed April 28, 2006.  Efforts are now being weighed to pursue alternative sources of additional funding.

In 2005, the Small Business Health Care Affordability Act was approved, allowing small businesses (2-9 employees) in Montana to join a purchasing pool to obtain health insurance.  Now called Insure Montana, the program provides tax credits to small businesses that are currently offering health insurance and provides premium assistance for small employers that begin to offer insurance through the State Health Insurance Purchasing Pool or a qualified association plan. The program is funded by a tobacco tax.  During the fall of 2006, enrollment in the program was approximately 2200 lives (360 firms).

In 2005, the New Mexico legislature created the Small Employer Insurance Program (SEIP).  SEIP is one of the Insure New Mexico! initiatives that addresses the problem of the high number of uninsured working adults in New Mexico.  SEIP is specifically tailored towards helping small employers and non-profits, with 50 or fewer employees, to voluntarily buy into a state-administered pool if the firm has not offered insurance for twelve months.  The pool is self-funded by premium contributions paid by employers and employees and backed by a stop-loss insurance policy.  To maintain the integrity of the risk pool, high-risk SEIP members become members of the high-risk pool.  The SEIP program and the Pool will use the same administrator so the individuals within the group will not know if they are drawing coverage from SEIP or from the Pool.  The benefit package will be similar to the New Mexico State Coverage Insurance program.

HealthPass allows small businesses (2-50 employees), with an active address in the New York City area, to provide a choice of over 25 health insurance options offered by 6 carriers to their employees.  The employer determines their level of contribution and 75 percent of eligible employees must join HealthPass. 

LIA Health Alliance is health purchasing cooperative that allows small businesses (2-50 employees) and sole proprietors, located in the greater New York City area, to offer employees to select health insurance from 5 carriers. 

Since the mid-1990s, Texas has had legislation allowing for the formation of group purchasing arrangements.  Both small and large employers may join a cooperative; however small employers may only pool with other small employers and large employers may only pool with other large employers.  As of March 2008, 57 cooperatives and coalitions were registered with the state. 

Starting in June, 2006, small businesses that employ 2- 50 employees have been able to join together to form purchasing cooperatives.  These cooperatives are able to purchase or facilitate providing insurance to employees (and dependents of employees) who work more than 30 hours per week.  The legislation authorized the cooperatives to negotiate premiums for their members. 

In 2003, Wisconsin Governor Jim Doyle (D) signed legislation into law that creates five regional health care purchasing alliances to bring farmers and small businesses into one pool per region. These cooperatives allow groups to directly negotiate with health plans. In 2005, Governor Doyle passed new legislation that removes limits on the number of cooperatives that can be developed in the state. By encouraging the establishment of cooperatives, the hope is that not only will more uninsured individuals access health insurance, but also that competition will increase among carriers and create more options for coverage.