A number of people both democrat and republican have got behind the idea that small businesses since they make up a large proportion of employers should be allowed to pool together to find better prices for their employees.

This process already happens through different trade associations that provide health care plans for small employers. An example may be seen in the Home Building Trades where carpenters who are union or not can join a trade association… the National Association of Realtors or Home Inspectors also have their trade groups…

In coverage for Senior Citizens we find medicare gap insurance provided by big organizations like the AARP and others…

Heck if you belong to Costco or Sams Club you can buy Health Insurance through a pool.

The problem with this is that you setup a large number of groups which are no better then large companies who leverage their weight to negotiate prices with individual companies based on the size of the group they are insuring.

THE REAL ANSWER
Now if you read this wrong you may get the idea that I am suggesting Universal Coverage or Price fixing but PLEASE READ IT and if you do not understand what I am saying then move on because this is definitely not what I am suggesting…

Here is the example:
If you or I or anyone goes to McDonalds and purchases a Happy Meal for $1 we all pay $1 for that happy meal…

If we do not like happy meals then we can order something else but we all pay the same price.

If I don’t like McDonalds because their food tastes bad to me or I don’t like their service or maybe I was scared by a Clown as a kid and I just don’t want to buy from them I can go anyplace else I want.

If I choose to goto Wendies because I like square hamburgers then Wendies does not need to sell them for $1 like McDonalds they can charge any price they want.

BUT if I buy a square burger at Wendies for $2 then everyone else pays $2 too.

So maybe you understand from that example

There is no price fixing .. people can buy Happy Meals or Square Burgers and we all pay the same price no matter who we are..

Now Apply this to Health Insurance Coverage

If I purchase a plan from ABC Company for $100 a month then anyone should be able to buy that same coverage for $100

If I have a PreExisting Disease or Problem and I need to buy the base plan for $100 and also pay $50 to cover my illness then Everyone pays $150 if they are exactly like me.

Health Care Insurance Companies can charge whatever they want.

They can offer any services that they want and provide as many different types of plans as they want at any price.

HOWEVER

If I work in a small business with 5 people I pay the same price as an Employee of Walmart when I buy that same plan that they have.

Insurance companies must cover everyone on their books.

If Walmart hires a new worker then Walmart should not pay less then my small business IF THE EMPLOYEE IS GETTING THE SAME EXACT PLAN.

We are not talking about Walmart providing Happy Meals from McDonalds and My company providing Square Burgers from Wendies…

If it is the SAME EXACT PLAN then we all pay the same price.

Why this is Fair to everyone

If Wendies wants to start selling Happy Meals they can … and McDonals can sell Square Burgers.

If you buy a Happy Meal at Wendies for $2 then McDonalds can sell them for $1 and attract more customers.

If I want to purchase insurance it should be based on my physical condition not based on how much power my employer can leverage.

If there is a Policy being offered to one person then the Insurance Company must offer that same exact plan to everyone…

We do not have to force Wendies to start selling Happy Meals

We don’t have to set the price of Happy Meals at McDonalds or Wendies if either of them choose to sell them.

BUT if they do decide to sell them then they sell them to EVERYONE at the same price.

Why Pooling won’t eliminate this
First there are many associations between large businesses that can not be reproduced by a trade association or insurance pooling group.

It does not matter if it is because board members share seats and control of businesses they work with … with a walmart board member on the board of an insurance company … or if they play golf together or go out whoring with Tiger Woods…

The fact is some people seem to get preferential treatment just because they are who they are.

Congress does not need to set the prices of Insurance.

They do not need to tell insurers what they must include in those plans.

They just need to make sure that if I walk off the street alone I pay the same price as one of the 1.4 Million Walmart workers gets or one of the millions of Federal workers gets.

After all why should anyone get a better deal just because they have more leverage WHEN the lower cost that the bigger business pays is offset by insurance companies charging other businesses more.

Here is the final example

If ABC Insurances sells a policy named Personal 1

Today Walmart or the Federal Government pays $10,000 for that policy to cover 1 person

A small business pays $20,000 for the same exact coverage

ABC Insurance sells:

Walmart 1 million Personal1 policies.

The Federal Government 10 million Personal1 policies.

Small Businesses 30 million Personal1 policies.

Under this example the small businesses make up a larger percentage of Personal 1 Policies but the small business is paying twice the cost.

UNDER A FAIR POLICY

ABC Insurance sells a Personal 1 Policy for $10,000

ALL PEOPLE whether employed by Walmart, The Federal Government or a Small Business pay the same price for the same coverage.

If the small business goes out of business then ABC Insurance loses 5 policy Holders.. If 5 people at Walmart get fired then they also lose 5 policy holders..

The cost to ABC Insurance to provide coverage to everyone is equal.

The cost to the consumer is also equal.

The Price is set at the insurance company not at a Broker or Through Special Deals at the Golf Course.

Most of All there is no overhead of a Trade Association or Pooling Organization…

The insurance company MUST offer the same policy to ANYONE at the same price.

And they set the price … and they set the features of the policy…

However there will probably need to be some Government regulation of minimal standards.