Small construction firms deserve affordable, quality health-care coverage

By Edward L. Rispone

The need for affordable health care for employees of America's small construction firms has never been more pressing.

According to the U.S. Census Bureau, in 2000 more than half of the approximately 702,000 construction firms in the U.S. employed fewer than five individuals. While many in number, these firms have little bargaining power and limited economies of scale compared to big health insurance companies, a disadvantage that continually exposes them to massive premium increases. And with premiums continuing to skyrocket, the number of uninsured construction workers in America is poised to grow dramatically.

However, legislation currently pending in the U.S. Senate could stop this disturbing trend. Introduced by Sen. Olympia Snowe (R-Maine), SB 545, the "Small Business Health Fairness Act of 2003," would allow small businesses, like many contractors in the construction industry, to purchase quality, affordable health care through an association, such as Associated Builders and Contractors. These association health plans would give small contractors the same opportunity to pool buying power for competitive health insurance rates that labor unions and Fortune 500 companies already enjoy.

In a bipartisan vote, the U.S. House of Representatives on June 19 passed AHP legislation (HR 660), but the U.S. Senate has refused to consider Snowe's companion legislation.

The Bush administration has come out strongly in favor of AHPs. In an Aug. 2 radio address, President Bush called on Congress to "let small businesses join together to purchase affordable health insurance for their employees." During a Sept. 4 speech in Kansas City, Mo., outlining his six-point plan for strengthening the U.S. economy, Bush again urged Congress to approve AHP legislation. Bush also announced to the media that he had spoken about the need for AHPs during an Oct. 7 cabinet meeting.

Additionally, U.S. Secretary of Labor Elaine L. Chao has been traveling the nation hosting a series of nationwide roundtable meetings with small business groups to discuss the need for AHPs.

The Senate AHP legislation is supported by numerous associations and trade organizations, including ABC, the U.S. Chamber of Commerce and the National Federation of Independent Business. By allowing small businesses to pool their collective purchasing power, ABC estimates that association members can reduce their health insurance costs by 15 to 30 percent, while obtaining the same economies of scale and administrative efficiencies available to employees in large employer and union health plans.

ABC's estimate of the cost savings provided by AHPs is based on solid experience.

In 1957, ABC established an association health-benefits plan that offered traditional health insurance plans to its members, many of whom were small business owners who otherwise would not have been able to afford health insurance coverage for their employees.

For more than 40 years, the ABC-sponsored AHP provided quality health-care coverage, with total expenses as low as 13.5 cents for every dollar of premium, including all marketing, administration, insurance company risk, claim payment expenses and state premium taxes. Today, small businesses that purchase coverage directly from an insurance company are typically charged 30 to 35 cents on every dollar of premium for insurance carrier expenses and profit.

ABC was forced to discontinue the health insurance portion of its plan in 2001 when the organization's insurance carrier terminated coverage citing incompatible and inconsistent state laws, thus removing a vital source of dependable, quality health care for ABC's member contractors.

ABC urges the Senate to follow the House's lead in passing AHP legislation. Employees of America's small construction firms deserve access to the same quality, affordable health care as employees of Fortune 500 companies and labor unions.

Rispone is national chairman of the Associated Builders and Contractors and a founder and chairman of the management board of Industrial Specialty Contractors in Baton Rouge, La.