From Families USA
February 22, 2000

New Patients' Bill of Rights Fact Sheets: HealthMarts

What are HealthMarts?
A HealthMart is a nonprofit organization that offers a variety of plans to the employees of businesses in a specified geographic area.

How do they work?
The HealthMart contracts with insurance companies to offer coverage to the employees of small businesses in its service area. The HealthMart prepares information and coordinates enrollment in the plans of employees and their families.

What's wrong with HealthMarts?
The concept sounds good, but there are particular provisions in H.R. 1334 that cause serious problems in the larger insurance market such as:

• The plans that contract with HealthMarts will be exempt from state laws that require the inclusion of certain benefits in every plan. These benefits include such things as mental health services and home health care. Plans will be able to manipulate their benefit packages to attract healthier people and discourage sicker people from joining. This will drive up costs for employees who need the broader benefits and may lead some to drop coverage.
  
• Because HealthMarts operate in specified geographic areas, they may be able to seek out areas with healthier, more affluent populations and "redline" areas with poorer and higher-risk populations.
  
• Insurance companies can have representatives serve on the HealthMart board. This could create a conflict of interest that adversely affects the consumer.

How many currently uninsured people would HealthMarts help?
The Congressional Budget Office estimates that a total of 330,000 out of the 44.3 million people who are uninsured will gain coverage through HealthMarts and Association Health Plans (AHPs) (see "Association Health Plans" fact sheet).

Will HealthMarts cause higher premiums for people not in the HealthMarts?
Yes. The Congressional Budget Office estimates that 20 million people will see their premiums rise as a result of the creation of HealthMarts and Association Health Plans (AHPs). This result is expected because HealthMarts and AHPs are given the tools to design and market their plans to the healthiest people, leaving the sicker people in plans that will be forced to raise premiums to cover the resulting higher expenses.