An Rx you could like

We set out to write a story about Arkansas’ new healthcare program, which has been hailed by many as the remedy small business has been seeking. It promises to extend reasonable coverage to the 100-or-less employees of concerns that currently don’t offer health insurance, at a price that won’t bankrupt the employers, the state, or the covered individuals. It seems almost too good to be true—as, we quickly learned, it is, if the small business happens to be a restaurant.

Or at least that will be the case if the program isn’t modified after a pilot test that commences later this year, involving 25,000 participants. Here’s how it will work during the burn-in phase: Companies that employ fewer than 100 employees and haven’t offered them health insurance during the prior 12 months can enroll every employee—and that’s not a variable; it has to be every employee—in the state-run plan. The employer pays $100 per month for an employee who earns more than $19,600, or twice the federal poverty level for an individual, but only $15 for each staffer below that pay threshold. A participating company could require employees to contribute some or all of the fees, state officials explained to the media.

In exchange, the employees get a package of bare-bones services, so minimal the state had to get approval from the U.S. Department of Health and Human Services before it could offer the sub-Medicaid level of care. Enrollees are entitled annually to six visits to a doctor, seven days in a hospital, two outpatient procedures or emergency-room visits, and two prescriptions per month. Enrollees have a $100 yearly deductible and pay 15% of the fees for the services, up to a maximum of $1,000 a year.

It ain’t grand, by any stretch. But, to put it frankly, it’s better than no coverage at all.

And certainly that level of coverage, at an affordable rate, would be a godsend to restaurant operators and their employees. But one provision of the package will render most of them ineligible: Either all your employees have to agree to enroll, or none of them can. It’s an all-or-nothing thing.

The state-administered program is being funded in part from the settlement fees that big tobacco companies paid Arkansas and the other states several years ago to avert future liability lawsuits, along with dollars from the federal government. But a big part of the expense will have to be shouldered by employers, and, at a maximum contribution of 100 per employee, widespread participation is necessary to deepen the pool of available funds. Apparently that was the reason behind the all-or-nothing provision; the state is clearly betting the enticement will convince whole staffs to opt for participation.

Clearly they haven’t met many restaurant staffs. They don’t know that youngsters think they’re invulnerable and can’t see any benefit in wasting money on something like health insurance, when it could be used for important things like buying iTunes and clothes.

It’s going to be a tough-sell for restaurateurs. You can only hope they focus their attention on the state and push as one to bend the all-or-nothing provision. They’ll have a few opportunities to do so. The program is the brainchild of Gov. Mike Huckabee, who wants to de-bug the program with that first 25,000-person trial before expanding it, first to 80,000 participants, and then to the whole state.

Hopefully the industry will be able to fine-tune the program, for the benefit not just of operators in Arkansas. According to The New York Times, the federal government is already eying the set-up as a model that could be rolled with its encouragement into other states. It already looks that good.