Bar Associations Providing Health Insurance
Jodi L. Cramer is an associate editor of The Affiliate and practices in the Office of General Counsel of the Federal Emergency Management Agency in Washington, D.C.
Bar associations are always looking for new ways to attract new members and retain their current ones. As health care costs continue to rise, offering health insurance as a member benefit can be one way in which they can accomplish these goals, and affiliates can partner with the senior bar to provide this benefit.
According to the U.S. Census Bureau, 45 million Americans lacked any type of health insurance in 2005, and 59.8% of all Americans get their health insurance from their employer. As the costs of health insurance rise and the burden is placed on the employer, those in small firms and solo practitioners may not be able to provide quality health insurance for themselves and their employees.
The Kaiser Foundation has predicted that rates for small firms with under 199 employees experienced a 2005 rate increase of 9.8%, while large firms with 1,000 to 4,999 employees had a rate increase of 9.1%. The average monthly cost for a single conventional plan for a small firm is $325 while for a large organization it is $309. For individual plans the costs can be even higher.
One way to reduce the cost of health insurance is to buy in larger quantities. Many professional and social organizations have pooled their resources to offer cheaper health insurance to their members. Although this type of program may be difficult for an organization as large as the American Bar Association, it is the perfect type of member benefit that can be offered at local or even state bar associations.
Health insurance plans can vary by region and state, which is why national organizations may not be able to provide the best rates for health insurance. On a state or city level, an organization could negotiate a better plan, especially if it involves local coverage.
You also need to check your state’s insurance regulations. For example, New York State issued an opinion on nonprofit organizations grouping together to purchase health insurance in March 2005. In the New York opinion, it was determined that nonprofits could join together to purchase one insurance contract but could not negotiate as a group for separate contracts for each organization. To apply this, the local bar association could not negotiate a rate for each small law firm but could purchase one contract which would cover any firm that wishes to participate under the bar organization’s contract.
This type of program involves more administrative support because the bar organization will have to administer the policy. These responsibilities include collecting payments and adding and removing employees. Each organization has to carefully consider whether it has the resources to administer a health insurance policy and if it is a financially viable option for the bar association.
If state regulations allow a bar association to proceed and it is financially viable for the bar association, the next step it to pick a plan. Many types of plans are out there and research is key to getting the best rates. The three most common types of plans are HMOs, PPOs, and PSOs.
HMOs, or health management organizations, are plans in which a primary care physician is assigned to each patient. The primary care physician controls referrals to specialists and other doctors. As result, if a patient knows that he or she needs to see a specialist, the patient must first see the primary care physician for the visit to be covered by the policy. HMOs have taken a lot of criticism in the last few years, but they are usually the most affordable type of health care plans.
PPOs are preferred provider organizations. This is a network of doctors who elect to treat plan participants. A patient can make an appointment with any doctor in the plan without having to be referred by a primary care physician. Patients need to check the list of doctors before making an appointment to ensure that the doctor is in the network. This is usually the most expensive type of plan.
PSOs, or point of service plans, are a hybrid between the two types of plans. They work like an HMO but allow the patient to go to another doctor, and the insurance plan pays a fixed rate.
To get the best rate, a bar association has to choose one plan and offer it to everyone. It will need to get over fifty participants, and over 200 will reduce the rates even further. It may be best to have an exploratory committee to survey interest and research the different companies and plans before going forward.
Purchasing a group rate insurance plan through a local bar association might not prevent small firms from feeling all the effects of rising health insurance costs, but by using the bar association to purchase health insurance, it might not cost as much as going it alone.