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Governor Rendell Tells Congress 'Prescription for Pennsylvania' Will Improve Health Care Climate for Small Businesses

WASHINGTON, Feb. 26 /PRNewswire-USNewswire/ -- Governor Edward G. Rendell today told U.S. lawmakers that small businesses struggle under a health care system that fosters spiraling costs, uneven and inadequate quality and little or no coverage for millions of Americans - and states cannot afford to wait for Congress to act.

Speaking before the U.S. House of Representatives Committee on Small Business, the Governor said he firmly believes the health care crisis is a national problem. However, in the absence of a federal solution, governors have been forced to develop their own plans. In Pennsylvania, that plan is called Prescription for Pennsylvania.

"Health care costs are projected to almost double by 2014 and paying for insurance will become unsustainable for state governments, our employers and our residents," Governor Rendell said. "Our small businesses will be especially hard hit and their workers represent the overwhelming majority of the uninsured in Pennsylvania. Small employers, employers with a majority of low-wage employees, and employers with older employees are less likely to be able to afford health care coverage for their employees."

The Governor said he was troubled by a November 2007 report from the Economic Policy Institute, which showed that from 2000 to 2007, Pennsylvania had the second-highest loss of employer-based health care coverage for people under 65 years old. In 2007, there were 491,392 fewer Pennsylvanians being covered through their employer than in 2000.

"The growth and volatility in the premium costs in Pennsylvania for small employers is a driving factor and primary reason for this erosion in Pennsylvania," Governor Rendell said. "Employer-based coverage is still the most prominent way Pennsylvanians receive health care, so it is critical that we try to stem this erosion of coverage as quickly as possible."

Governor Rendell's Prescription for Pennsylvania health care reform plan expands access to affordable health care coverage, improves the quality of care Pennsylvanians receive and gets health care costs under control for employers and employees. Since it was rolled out in January 2007, it has been recognized by The Henry J. Kaiser Family Foundation, Robert Wood Johnson Foundation, and Families USA for its reasonable approach to health care reform.

Several pieces of the Prescription for Pennsylvania have been enacted, including new legislation that puts Pennsylvania at the nation's forefront in tackling and reducing hospital acquired infections; a new program that deals with how chronic diseases are treated; and updates in decades-old laws which allow nurse practitioners, midwives, physician's assistants and dental hygienists to practice to the full extent of their education and training.

Pennsylvania has also expanded its Children's Health Insurance Program (CHIP) to Cover All Kids and has implemented a new approach to long term living services.

The two critical pieces of Prescription for Pennsylvania that remain to be passed are the two that, most directly, will help small businesses. The first is a plan to Cover All Pennsylvanians - called CAP - that will make affordable basic health insurance available to eligible small businesses that do not presently offer health insurance to their employees and to the uninsured. This coverage will be offered through the private insurance market.

Small business employers can participate if they have 50 or fewer employees who earn less than the state average wage and currently do not offer health insurance to their employees. Employers who choose to join CAP will pay approximately $130 per employee per month, and employees will pay a premium of $40 or $60 per month depending on family income. If family income is less than 150 percent of federal poverty level, the employee will not pay a premium.

All uninsured Pennsylvanians, no matter what size company they work for, will be able to purchase affordable health insurance through CAP. A family of four earning up to $61,000 a year will receive help from the state paying their premiums, and all uninsured adults who earn more than that amount - 300 percent of the federal poverty level - can participate in CAP by paying the full cost.

Pennsylvania's CAP proposal differs from widely publicized plans proposed in Massachusetts and California in that it is not mandated. Governor Rendell has proposed a sustainable funding model to pay for CAP, including redirecting existing state money, taking advantage of federal match as other states are doing, charging small employers and their employees premiums, using surplus funds in a medical malpractice account and raising taxes by 10 cents on cigarettes and taxing other tobacco products for the first time.

The second critical piece of reform, which is currently being debated, is more effective regulation of the insurance industry. It will ensure that small businesses and other consumers are not faced with skyrocketing costs for their health care coverage.

Pennsylvania is one of only two states in the country that does not limit the rating factors insurance companies can use to determine rates in the small group and individual group market.

Under Governor Rendell's Prescription for Pennsylvania, insurance companies could only use age, location and family size to determine rates. The most expensive premium rate for a certain product would be limited to no more than twice as costly as the lowest rate for small and individual group coverage, so risks could be shared more broadly and insurance could be affordable for more people. And, 85 percent of every premium dollar must be used to pay for health care and, if not, the state Insurance commissioner can require insurers to rebate premiums to employers.

Insurers writing health insurance in the small employer and individual market would be required to offer the same basic health care plan, so employers can compare apples to apples in choosing health care coverage, which will foster price competition in the small group and individual market.

Other Prescription for Pennsylvania initiatives will generate significant health care cost reductions by eliminating additional costs due to avoidable health care acquired infections, avoidable hospitalizations due to lack of community care for chronic conditions, and avoidable errors.

To ensure that these savings are translated into reduced premiums for employers and individuals, Prescription for Pennsylvania would give additional rate approval authority to the Insurance commissioner, tying cost control in health care delivery to cost control of health care insurance.

"Research shows that few American business owners would be satisfied with the performance of the health care system if it were their business," Governor Rendell said. "Spiraling supply costs, inefficiencies in the system driving up overhead, poor quality outcomes endangering customers, and little or no access for millions of Americans - these are not the markers of a successful business. These are the markers of a business in crisis.

"As the largest collective purchasers of health insurance, employers can and should drive the fundamental health system reform our country needs - and that Americans want. But in order for them to do so, we must be sure that we are giving our small businesses the tools they need to keep their employees healthy and their productivity competitive so that they can succeed in an increasingly global marketplace.

"That is not happening, and it is unacceptable. It's why states like Pennsylvania are tackling this challenge."

Governor Rendell's written testimony to the House Small Business Committee, as well as more information on the Prescription for Pennsylvania, can be found at

The Rendell administration is committed to creating a first-rate public education system, protecting our most vulnerable citizens and continuing economic investment to support our communities and businesses. To find out more about Governor Rendell's initiatives and to sign up for his weekly newsletter, visit

CONTACT: Chuck Ardo


Amy Kelchner (GOHCR)


SOURCE Pennsylvania Office of the Governor
Copyright©2008 PR Newswire.
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