A key U.S. Senate committee on Mar. 15 endorsed a bill for full Senate consideration that would allow small businesses, through their trade associations, buy low-cost health insurance for their employees and themselves.
The cost and availability of health insurance is a top issue for small-business owners, due to skyrocketing costs (annual double-digit growth) and the fact that more than 27 million uninsured Americans are small-business owners, workers or their dependents, the largest segment of the U.S. uninsured population.
The bill which passed the Health, Education, Labor and Pensions Committee is “The Health Insurance Marketplace Modernization and Affordability Act of 2006” (S 155). It calls for federally-certified “Small-Business Health Plans,” which would bypass more demanding and costly state insurance regulations, including some state-mandated benefits for workers.
This is the first time the Senate has acted on group health plans for small businesses. The concept passed the House of Representatives eight times in recent years as “association health plans,” but always stalled in Senate, where no action of any kind was taken. Congressional and business observers called the committee’s Mar. 15 action a break in the impasse that could lead eventually to Congressional passage of the legislation.
“Today was a good day for small-business owners,” said Dan Danner, executive vice president of the National Federation of Independent Business, the nation’s largest small-business group. The committee’s approval is “a significant step toward ending the health-insurance crisis facing the … small-business community.
“SBHPs will level the health-insurance playing field,” he said, “and give participating small businesses the same buying power as Fortune 500 companies and unions by allowing them to band together through trade and professional associations to purchase affordable health benefits. Small employers will enjoy savings from greater bargaining power, economies of scale, and administrative efficiencies.” He called SBHPs “a fair, common-sense and badly needed solution” and urged the full Senate to pass the bill.
The SBHP bill is supported by a coalition of 190 business groups, including Jewelers of America and the NFIB, representing 12 million employers and 80 million workers.
Earlier “association health plan” proposals were opposed by state insurance regulators, insurance companies, and consumer advocates who said their exemption from state oversight would lead to abuse. This new SBHP legislation, drafted by Sen. Michael B. Enzi (R-WY), chairman of the Senate committee, though similar to AHP bills that passed the House eight times, gained bi-partisan support by addressing some of those concerns.
In Enzi’s bill, associations offering SBHPs must first exist for three years and for purposes besides health plans; coverage must be federally certified; in harmony with states’ requirements, and governed by a board of trustees. Both insurers and small-business associations could sell lower-cost insurance without state-mandated benefits, but must offer comprehensive coverage associations can’t base coverage on an individual’s health status, though a uniform federal standard the bill creates gives insurers more latitude to charge higher premiums for sick people than currently under some states’ rules.