A bipartisan group of senators think they've found a way to overcome objections that have derailed past efforts to reduce health insurance costs for small businesses. New legislation introduced by Sen. Dick Durbin, D-Ill., and Sen. Olympia Snowe, R-Maine, would encourage states to set up health care purchasing pools for small businesses and the self-employed. The Small Business Health Options Program also calls for the establishment of a nationwide purchasing pool in 2011.

The bill, which was crafted after a year of negotiations among senators and various interest groups, also would provide a tax credit to self-employed individuals and small businesses that cover their employees.

Beginning in 2011, insurance companies no longer could base their premiums on a company's claims history or employee health status. This would keep insurance companies from jacking up premiums on a small business just because one employee has serious health problems.

Durbin said the bill is a breakthrough because it would allow small businesses to save money on health insurance by pooling their purchasing power while retaining state regulation of health insurance.

Under the legislation, nationwide insurance plans would have to meet minimum benefits standards developed by the National Academy of Sciences' Institute of Medicine. States could opt out of the national purchasing pool if they create their own pools and adopt insurance rating reforms.

Two powerful business groups -- the National Federation of Independent Business and the National Association of Realtors -- endorsed the legislation. So did the Service Employees International Union, a labor union that has partnered with NFIB in the Divided We Fail coalition, which has urged Congress to find ways to expand health coverage.

"If you want to address coverage, you must first address cost," said NFIB President Todd Stottlemyer.

This legislation would do that, he said, and it could break the "decades-long jam" that has blocked small business purchasing pools.

Charles McMillan, a Realtor from Irving, Texas, and president-elect of the National Association of Realtors, said the bill is "a much-needed step forward."

This article is from the Denver Business Journal - by Kent Hoover, Washington Bureau Chief
Friday, April 11, 2008