Workers in small firms that do not provide health insurance constitute a large block of the uninsured. How to bring them (and their dependents) into coverage is a major policy issue. Some proposals use current public programs like Medicaid or SCHIP, or provide sliding-scale tax credits to enable low-income workers to purchase coverage on their own. But such measures can inadvertently cause broader reductions in coverage and forego the risk spreading, payroll-based contribution and convenient enrollment of employment-based coverage.

The Institute assists the development of hybrid coverage initiatives like the Health@Work^SM financing strategyto bring together available subsidies from various sources (existing tax subsidies, new tax credits, existing public program funds, modest contributions from previously non-offering employers, etc.) to make affordable work-based coverage available to workers in small firms that are otherwise unlikely to offer coverage. This approach could reinforce rather than undermine the sense of individual and mutual responsibilities essential to coverage by and for all Americans.

Purchasing pools can be effective mechanisms for coordinating subsidies for working uninsured and their families with private employer dollars, providing a stable source of coverage and streamlining eligibility determination, enrollment, and plan payment from multiple funding sources through one administrative system. Without subsidies for low-income workers and/or strong incentives for participating in health insurance, purchasing pools will not reduce the number of uninsured.

As stand-alone initiatives, purchasing pools can benefit small employers by providing them some administrative efficiencies, employee choice of health plan, and consumer advocacy and empowerment that is otherwise generally unavailable in the market.

IHPS provides technical assistance to States and localities that want to expand coverage for low-income workers and their families in small firms.

Contact us to request assistance.

Use of Subsidies to Low-Income People for Coverage through Small Employers (Health Affairs, May 2003)

Coverage of Uninsured Workers in Small Firms: The Significance of Self-Employment among Firm Owners (IHPS, April 2003)