The Health Insurance Plan of California (HIPC), a health insurance purchasing pool designed for small business, suffers from the same deficiency many businesses suffer: poor marketing.
HIPC was established in 1993 to allow small companies that might otherwise not be able to provide employees health insurance a means of affording it. Today, the pool works with 7,000 small businesses and has 130,000 active members.
Yet, according to a 1996 survey by the National Federation of Independent Business, almost half of its 44,000 California members provide no health care coverage, mostly due to cost.
Patricia Steinbarth, HIPC executive director, admits the program isn’t reaching as many small businesses as it could.
“I think that’s our biggest drawback,” Steinbarth said. “People don’t know about us because we don’t have millions to spend on marketing.”
Steinbarth emphasized that while the purchasing pool is state-sponsored, it’s not state run. Instead, HIPC contracts with an outside company to run the program.
The program is organized by the Managed Risk Medical Insurance Board as provided in the legislation that created the program, AB-1672. This board sets the rules for participation and negotiates contracts with health plans.
Marketing, enrollment and administrative functions are provided under contract by Employer’s Health Insurance, which is also responsible for the sale of the program through health insurance agents.
Alan Peters, an Irvine-based independent broker specializing in employee benefits, said he gets good response to the program.
“It sets well with employers,” Peters said, “because it shifts the burden of choice to the employee. And, what they (the employers) see is what they get in terms of rates.”
Vickie Waldo, controller for Irvine-based Supreme Food Services chose HIPC three years ago.
“The main advantage to us is it allows our employees not only a choice of plans, but also of doctors,” she said.
She qualified that, however, by saying that, in the past year, preferred provider (PPO) and point of service (POS) access still popular with some employees has been more limited than in the past, leading to a small amount of dissatisfaction.
Still, Waldo said company officials are satisfied. “Their service is good and the billing is impeccable,” she said. “We’ve had no bureaucratic problems at all.”
All businesses in the state with two to 50 employees are eligible, though there is pending legislation that would expand the market to include companies having up to 100 employees. Only full-time employees (those who work at least 30 hours per week) and who live in the state are eligible.
HIPC is voluntary, but an employer cannot enroll unless at least 70 percent of the employees also choose to participate. The employer must pay for at least 50 percent of the lowest-priced coverage plan.
If the employer pays 100 percent of the premium, the business must have 100 percent participation from eligible employees. No employee is denied coverage due to prior health conditions, and dependents are also eligible for coverage.
The HIPC is the first statewide government-sponsored small employer purchasing pool in the nation, and it has been widely cited as an example of applied managed care.
