NCPA - National Center for Policy Analysis


June 15, 2005

Washington state lawmakers are considering a proposal to amend the state's Basic Health Plan to the tune of $26 million every two years, says Paul Guppy of the Washington Policy Center (WPC). The proposal would create a Small Business Assist Program to expand government-sponsored health care to small businesses.

However, the state can hardly afford it. The Basic Health Plan is already having trouble meeting its current obligations, and the state budget as a whole is expected to face a $1.5 billion shortfall over the next two years.

Furthermore, expanding the Basic Health Plan is problematic:

  • The program will create a "crowding-out" effect by discouraging small businesses from providing private health coverage on their own.
  • The government will act as a tax-funded insurance company in competition against other private insurers, yet not have to comply with mandates, regulations and oversights that beset private companies.
  • Washington's health care market is still recovering from failed reforms of the 1990s; now is not the time to discourage private health insurers from entering the market.

Mandates currently add about 15 to 20 percent to the cost of health insurance. Lawmakers should get out of the business of health insurance and instead reduce mandates imposed on private insurance, streamline regulations and make Health Savings Accounts more accessible to small groups, says Guppy.

Source: Paul Guppy, "Government Entering the Health Insurance Business is Not the Way to Help Small Businesses," Washington Policy Center, March 2005.


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