This month, a bipartisan group of senators introduced legislation to make health insurance more available and affordable for the employees of small businesses and for the self-employed. The legislation, the Small Business Health Options Program (SHOP), S. 2795, is sponsored by Senators Richard Durbin (D-IL), Olympia Snowe (R-ME), Blanche Lincoln (D-AR), and Norm Coleman (R-MN).
"Small businesses have very little buying power and few affordable options when it comes to health coverage, so any steps that make access to health insurance more affordable for small businesses is certainly good news," said ABA COO Oren Teicher.
According to Durbin, there are 5.8 million small businesses, which employ 47.1 million employees, and there are 14.1 million self-employed individuals. SHOP hopes to tackle the challenges that small businesses have in providing healthcare for their employees by:
- Allowing small businesses to band together in a statewide or nationwide pool to obtain lower health insurance prices by spreading their risk over a larger number of participants;
- Keeping prices low by offering a range of private health plans that have to compete for business;
- Providing annual tax credits of up to $1,000 per employee ($2,000 for family coverage) if they pay for 60 percent of their employees' premiums;
- Providing small business owners with a bonus tax credit if they pay for more than 60 percent of the premiums;
- Banning health status ratings in order to protect businesses from large rate increases simply because one employee gets sick;
- Ensuring that the variation in premium rates will be reduced so that small businesses will be better able to afford coverage without facing as much of a competitive disadvantage if they have older workers.
In addition, SHOP would provide a website with comparative information about a variety of private health plans, and would allow new health plans to be offered nationwide but would continue to rely on state insurance commissioners to ensure that all health plans meet state requirements for financial solvency, network adequacy, and claims and appeal procedures.
"Contrary to popular belief, most people who don't have insurance are not out of work," said Durbin in a statement. "In fact, they work full time in small businesses that cannot afford health insurance for their workers. Small business owners across America are trying to do their part to help provide their employees with health insurance, but they are struggling with annual double-digit premium increases. This bill helps solve that problem."
The National Federation of Independent Businesses, the National Association of Realtors, and the Service Employees International Union are among the groups in favor of SHOP.
Over the past few years, a number of bills that look to provide small businesses with affordable healthcare have been introduced into Congress, without much success. Most recently, on April 3, 2008, Sen. Michael Enzi (R-WY) introduced The Small Business Health Plans Act of 2008 (S. 2818), which would allow business and trade associations to band their members together across state lines and offer group health coverage to their employees. According to Enzi, by banding groups of small businesses together on a regional or national basis, SBHPs would create real purchasing power that small businesses could never have on their own. This purchasing power, he explained, will allow them to negotiate for better prices and greater benefits.
In May 2006, an earlier SBHP bill, introduced by Enzi, The Health Insurance Marketplace Modernization and Affordability Act, S. 1955, was blocked when the Senate voted 55 - 43 against cloture. The legislation was the focus of a heated debate on healthcare, as a number of prominent organizations, such as the AFL-CIO, the American Cancer Society, and the American Diabetes Association, launched campaigns in opposition to the bill. The groups argued that, by overriding state regulations, SBHPs could lead to low-end insurance plans that do not cover benefits that are currently mandated in many states, such as cancer screenings, mammography, pap smears, and colonoscopies. Unlike Enzi's bill, SHOP does not override state healthcare regulations.
"SHOP will level the playing field by allowing small businesses and the self-employed to pool together the same way larger employers are able to do so they can secure quality, affordable health insurance at significantly reduced costs," Snowe said in a statement. "By taking action now, and passing the SHOP Act, we can partner with our nation's job creators and provide better healthcare options with more choices for less cost."