Urban areas have been more likely than their rural counterparts to deal with small businesses that don't provide their employees with healthcare coverage. But an alliance in a mostly rural area of Kansas is forming a purchasing pool for small businesses.
Alliance Employee Health Access will serve firms that employ between two and 50 people, and it expects to have 3,000 enrollees when it becomes fully operational in January 2000, said James Schwartz. His consulting firm, James Schwartz and Associates, Topeka, Kan., is managing the start-up. Schwartz projects enrollment of 15,000 by 2002.
The United Methodist Health Ministry Fund, a Hutchinson, Kan.-based charity, is bankrolling Alliance with $325,000 in grants and loans in response to its survey of small employers last year. The survey found that more than 20% of the state's 67,000 small businesses don't offer healthcare benefits and those that do pay 30% more in premiums than larger firms. That's a particular problem in Kansas, where 70% of the state's work force is employed by firms with fewer than 200 workers, compared with 40% in the rest of the country, according the U.S. Census Bureau.
"Small businesses have a lot more impetus than larger firms to do something (about stabilizing their premiums and access to coverage)," said Schwartz, former executive director of the Kansas Employer Coalition on Health. "The market for them is very fragile."
Schwartz said Alliance would operate like other successful small-group insurance pools, such as the Health Insurance Plan of California, with employees choosing from among two to four health plans. Operations would begin in the Wichita area, then slowly spread to about one-third of Kansas' 115 counties, Schwartz said.
United Methodist Health President Kim Moore was unavailable for comment at deadline.
Blaine Bos, principal with William M. Mercer benefits consulting firm in Chicago, said small employers in rural areas particularly lack access to health benefits because many plans can't justify marketing to geographically scattered businesses.
"You get a lot of firms that specialize in life or fire insurance offering healthcare coverage to these areas, and they tend to drop in and out of the market every five years or so," he said.
But even larger firms can sometimes have trouble getting coverage. Schwartz said the Kansas employer coalition's attempt to form a general purchasing pool collapsed a couple of years ago, partly because potential participants were separated geographically and one potential insurer was reluctant to assume the risk.