Health insurance pools for small businesses: pros and cons
Here we go again with a health care story. It’s just a popular topic I keep running into these days.
Business Week Online reports: “The Hidden Snags in Health-Care Pools.”
“In theory, small businesses banding together for cheaper rates makes sense. In practice, legal constraints and limited bargaining power are big obstacles.”
“In theory, by allowing small outfits to buy insurance together, the pools bestow some of the negotiating power that large companies enjoy. The pools are supposed to mitigate price hikes if an employee becomes seriously ill, since all individuals in the pool are considered as members of one large group for underwriting purposes. And the pools also aim to cut administrative costs.”
“In reality, the pools often fail, usually thanks to a combination of factors. It might be that they don’t attract enough member businesses and insurance companies, or because the pool becomes a refuge of last resort for workers with chronic conditions, making premiums too high to be competitive.”
My bar association pool has become the refuge of last resort, and costs have indeed soared.
