WASHINGTON – U.S. Senator Jeff Bingaman today chaired a hearing in the Health, Education, Labor and Pensions Committee on health insurance market reforms. 

HELP Chairman Edward M. Kennedy tapped Bingaman to lead the panel’s health care reform working group on insurance coverage as a way to prepare for a debate on comprehensive health reform.  This is the second hearing Bingaman chaired on the issue of coverage; the first hearing was about “underinsurance.”

Bingaman’s opening statement is as follows:

This is the second in a series of coverage hearings designed to explore the key issues surrounding legislation to secure meaningful and affordable health insurance for all Americans. 

Today’s hearing focuses on the insurance market reforms needed to reach this goal – particularly in the small-group and individual insurance markets.   I want to thank the panelists for their participation today. 

Currently, approximately 60 percent of Americans receive coverage from “large employers” – that is employers with more than 50 employees.  The insurance offered through these employers include many protections such as requirements that insurance companies provide coverage to all interested employees, the creation of large risk pools to spread the cost of coverage, and prohibitions on excluding coverage for specific pre-existing conditions. 

In contrast, coverage in the individual market is much less predictable and regulations governing this market vary considerably by state.  Individuals may or may not have important protections to ensure that coverage is meaningful.  For example, individuals may have critical health conditions excluded from coverage.

Or, they may have very high cost sharing requirements or be excluded from coverage all-together based on broad, non-medical characteristics.  For example, older individuals on average are charged 6 times more for a policy than younger individuals and women may be charged almost 50 percent more for coverage than their male counterparts.

In the end about 30 percent of individuals applying to the individual market are either denied a policy or are forced to pay significantly more for coverage and only about 15-17 million Americans purchase policies on the individual market.  

Many others forgo coverage all together contributing significantly to 45 million Americans without health insurance. 

Experts also have highlighted important concerns about insurance purchased by small businesses with less than 50 employees, also known as the “small-group market.”

In this market, like the individual market, it’s more difficult to spread risk because of the small size.

Similarly, small-employers may have less bargaining power to negotiate affordable and meaningful coverage.

While premiums may be similar or even less costly on the small group market, insurers recently reported that cost sharing may be significantly higher than the large employer market. 

In many cases small-business can’t find affordable and meaningful coverage and chose not to provide health insurance to their employees.

In fact, according to the Kaiser Family Foundation, less than two-thirds of small businesses offer health benefits to their employees.

This problem is only getting worse and 90 percent of the decline in employer sponsored coverage has been attributed to small-businesses.

I look forward to exploring these problems and their solutions with our panelists.