Small Businesses Makes Big Strides in New York 

By Jean Oxendine


Closing the Gap, The Problem of Accessing Health Care • August/September 1999


Employees of small businesses are often left without health in 

surance coverage. A report from the Kaiser Family Foundation 

shows half of all uninsured workers are either self employed or 

work for firms with fewer than 25 employees. Small business owners 

want to provide insurance at a low cost 

ing the range in premiums so that coverage will be more affordable for 

higher-risk firms; and adding new standards for underwriting and 

contracting practices that make coverage more attractive and available 

to employers. 

NewYork State has made the most 

to employees and they want to have a “Small business owners want to provide sweeping standards, starting with a full 

choice in plans, but very often these 

businesses don’t have the ability to offer insurance in a cost-efficient way, said 

Rosa Gil, DSW, special advisor to the 

insurance at a low cost to employees and 

they want to have a choice in plans, but very 

often these businesses don’t have the ability 

“community rating” in 1993. The community rating ensures that health insurance enrollment is open, there is no preexisting condition clause, and no physimayor for health policy and director of to offer insurance in a cost-efficient way.” cal examination is required. The insurer 

the Office of Health Services in New 

York City. But many small businesses are minority owned and operated, according to Gil. 

Small Businesses on the Rise 

The proportion of the workforce doing nontraditional work, 

such as part-time, contingent, and self-employment has grown in the 

last decade, according to the Kaiser Family Foundation. As jobs have 

shifted from high-paying industries like manufacturing to low-paying sectors like retail trade and services, health insurance coverage has 

declined and costs have risen. 

The rise in health care costs has made it difficult for small businesses to begin or continue to provide coverage for their employees. 

The response of employers to rapidly rising health care costs has not 

always been to drop coverage, but to increase the employees’ share of 

the premium, and by tightening eligibility requirements for part-time 

workers, and by replacing full-time employees with part-time workers. Employees working for small businesses who choose to buy their 

own insurance must pay very high prices, according to the Children’s 

Defense Fund. As many individuals cannot afford these costs, they 

often go without insurance. 

Furthermore, many insurers are unwilling to sell coverage to small 

firms, according to Kaiser. And in cases where they are willing, some 

insurer practices in this market have raised concern. Some 

companies have refused to sell policies to those whom they felt 

were of high risk, or they carefully scrutinized the medical histories of 

prospective enrollees. Unfortunately, the problem extends beyond 

small businesses, and seems to be worsening. In 1980, the majority of 

employees at medium and large companies had employers who paid 

the full cost of family coverage. By 1983, more than three-fourths of 

these employees were required to help pay such costs. 

While the law makers in the federal government continue to 

hash out the problem of health care coverage, individual states have 

been busy passing their own laws. Between 1989 and 1995, 45 states 

passed laws to make health insurance more accessible and attractive to 

small businesses. Some of the reforms of these new regulations include: allowing insurers to sell “bare-bones” insurance to small firms, which typically cost less; narrowcan not discriminate for any reason, including age or physical condition; all applicants must be charged the 

same. 

New York City: Small Business Health Insurance 

In February 1999, New York City Mayor Giuliani initiated a 

demonstration project called “Small Business Health Insurance” (SBHI), 

to make available comprehensive, low cost health insurance to the 

estimated 26,000 small employers (those with 2-50 employees) located in the predominately minority areas of East Harlem, South 

Bronx, and Northern Brooklyn. 

“We decided to target small businesses after conducting market 

research of small employers in NewYork City,” Gil said. The majority 

of these businesses want to offer insurance, but only 50 percent are 

currently able to do so.The insurance companies had not been focusing their efforts on small businesses. This project created that competition. 

The percentage of small businesses in New York City owned by 

minorities is very large. Hispanics are much more likely to be uninsured in part because they are more likely to own their own businesses. 

Among Hispanics ages 18-34, almost 50 percent are uninsured. The 

lack of insurance affects minorities and immigrants disproportionately, according to Gil. 

The New York SBHI program provides health insurance through 

brokers by Group Health Incorporated (GHI), which was awarded 

the contract. Most covered services must be obtained within two 

networks: Generations+ Health Network (Metropolitan and Lincoln 

Hospitals and affiliated providers), and North Brooklyn Health Network (Woodhull Hospital and affiliated providers). 

SBHI is purchased by small employers for themselves and their 

employees, and the employer chooses what (if any) portion of the 

premium they plan to pay for the employee. The amount of the 

monthly premium is $99.80 per employee, or $235 for a family 

policy. This is less than the average cost for small businesses in New 

York, which averages $255 per month. 

continued on page 2>>>> 

Office of Minority Health Resource Center 1 U.S. Department of Health and Human Services 
Small Businesses Makes Big Strides in New York 

By Jean Oxendine


Closing the Gap, The Problem of Accessing Health Care • August/September 1999


SBHI is unique in that this is not a government subsidized program, but a marketbased product sold like other health insurance through brokers, and available to any 

small employer. Anyone is eligible for the program, including immigrants, as long as they 

are employees of small businesses, said Gil. 

The SBHI program has minimized unnecessary paperwork, thanks in part to the State’s 

community rating. 

The program has sparked a lot of interest in NewYork’s small business community. 

Since February, 23 formerly uninsured small 

businesses have applied to enroll. If enrolled, 

this would cover 280 individuals who are 

now uninsured. In addition, over 350 other 

businesses have expressed an interest in the 

program, including those located outside of 

the demonstration project area. Several hospitals are also interested in attempting a project 

like SBHI. The Mayor’s Office is working to 

develop the SBHI model for Staten Island. 

SBHI has developed strong outreach 

efforts to spread its word. It has assigned insurance specialists to work on outreach campaigns to educate the community about the 

program. GHI, along with the Health and 

Hospital Corporation (NewYork City’s public hospital system), publicized the SBHI program through traditional marketing techniques, such as newspaper ads, posters, brochures and direct mailings. To attract small 

businesses, a health insurance specialist hired 

by each of the hospitals went door-to-door 

in area neighborhoods. They also canvassed 

health fairs and community centers. 

To determine the effectiveness of the 

marketing and outreach and analyze utilization by new enrollees, SBHI is undergoing 

an independent evaluation by 

Pricewaterhouse Coopers, an independent 

professional services company. 

New York Health Purchasing Alliance 

SBHI is not the only program helping 

the uninsured in New York. Starting this fall, 

the New York Health Purchasing Alliance will offer small 

businesses a total of 16 HMO, 

POS, and PPO options from four health plans. 

Business with as few as three employees may 

choose from the 16 plans, according to Gil. 

New York City awarded the New York 

Business Group on Health a $1 million grant 

last year to develop more health benefit options for small businesses. The Group’s Health 

Purchasing Alliance unit —a private, nonprofit business group established through the 

support of the Mayor’s office— will administer the grant. 

The Health Purchasing Alliance will 

provide employees a choice of insurance carriers that will offer a standard benefit package called a “Health Pass.” Employees then 

choose a plan and become enrolled in a centralized system through their employer. 

The Alliance will assist employees in 

choosing a plan by offering comparative customer satisfaction and quality information on 

the plans. Small business owners will set the 

premium contributions at a level the employees can afford. This allows the employers to 

control benefit costs and increase employee 

satisfaction. 

The Health Purchasing Alliance benefits all involved, according to Gil. Health 

plans will be able to increase their share of the 

small group market by enrolling new plan 

members. Insurance brokers and general 

agents will now be able to offer customers a 

product for which there is a demonstrated 

demand. 

The program will reduce premiums 

paid by New York employers and will make 

small businesses more competitive and better 

able to attract and retain employees. And, 

the overall quality of health coverage for small 

businesses will be improved. 

Many of New York City’s more than 

200,000 small businesses with two to 50 

employees will begin enrollment in September 1999. The Alliance will be sold exclusively through certified general agents and 

brokers. 

For more information on either the SBHI 

program or the New York Health Alliance, call 

Dr. Rosa Gil at (212) 7882888. Employers 

interested in the SBHI may call (212) 501­

4HHC.

Though the economy is strong, the 

numbers and rates of the uninsured continues to go up, according to a study conducted by researchers at The Cambridge 

Hospital/Harvard Medical School in Massachusetts. 

The study was published earlier this 

year in the American Journal of Public 

Health (January 1999, vol. 89, no. 1). 

Researchers concluded that most affected 

groups were African Americans, Hispanics, children, young adults, and poor and 

middle income families. 

Key facts: 

•	 Between 1989 and 1996, the number of uninsured persons increased 

by 8.3 million. 

•	 Because Hispanics are the fastest 

growing segment of population, they 

accounted for 36.4 percent of the 

increase in the number of uninsured. 

•	 Blacks and Hispanics together accounted for more than 50 percent 

of the increase in the number of uninsured. 

•	 By the year 2000, the number of 

uninsured is expected to reach 44 

million. 

•	 Families with incomes below 

$25,000 had the highest rates of 

uninsurance. 

•	 From 1994 through 1996, the largest increase in the uninsured both in 

absolute numbers and percentage 

uninsured was among middle income families. 

Number of Uninsured 

is on the Rise 

Office of Minority Health Resource Center	 2 U.S. Department of Health and Human Services