America's independent, non-partisan advocate for overburdened taxpayers.


NTU Supports H.R. 490, the Small Business Healthcare Savings Act

February 4, 2005

The Honorable Mike Pence
United States House of Representatives
426 Cannon House Office Building
Washington, DC 20515

Dear Representative Pence:

On behalf of the 350,000 members of the National Taxpayers Union (NTU), I write to offer our strong support for the Small Business Healthcare Savings Act (H.R. 490), which will eliminate the federal guaranteed issue requirement in the small group health insurance marketplace. Congress mandated guaranteed issue in the small group market when it passed the Health Insurance Portability and Accountability Act (HIPAA) in 1996. This mandate has only served to raise premiums, limit coverage choices, and make health insurance less affordable for all small businesses.

Guaranteed issue in the small group market forces health insurers to accept any small employer regardless of the group's claim history or health status. This mandate rewards healthy groups that wait until they are sick before they buy insurance, thus creating a vicious circle, which leads to a progressively sicker health insurance pool and spiraling health care prices. In large part due to the costs associated with guaranteed issue, only 52 percent of small businesses now offer health insurance.

Guaranteed issue is a regulation with a direct, dramatic, and demonstrable impact on cost and availability of coverage. Given that guaranteed issue is nationwide in the small group market and limited to only certain states in the individual market, it obviously contributes to making the small group market more expensive than the individual market. For example, policies sold to small business are on average 25 percent higher than for individuals.

Overall, not much can be said in defense of guaranteed issue or the tendency of Congress to micromanage and over-regulate the health care marketplace. Health care costs continue to rise by double-digits on an annual basis, more Americans go without health insurance than ever before, and the regulatory burden grows heavier. Although socialist economic policies have failed miserably worldwide, it appears that many in Congress would like to socialize U.S. health care one regulation and mandate at a time.

Thankfully for taxpayers, small businesses, and health care consumers in general, your leadership on this important issue has provided one of the best possibilities Americans have for a move away from the broken, big government health care model. I urge your colleagues in both Houses of Congress to join in support of this important initiative and assure you that American taxpayers strongly support H.R. 490.


Paul J. Gessing
Director of Government Affairs