New Legislation to Help Small Business with Healthcare

Assistant Senate Majority Leader Dick Durbin (D-IL), Senator Olympia Snowe (R-Maine), and Senator Blanche Lincoln (D-Ark.) have introduced legislation – for consideration in the upcoming Congressional health care reform debate – designed to make insurance more available and affordable for the 47.0 million employees of the nation’s 5.9 million small businesses and for 14.0 million self-employed individuals. 

A diverse coalition of stakeholders from across the political spectrum and each with their own priorities for broader reform have joined together to support the bipartisan Small Business Health Options Program (SHOP) and address the needs of small businesses as one important component of health reform.  The bipartisan Small Business Health Options Program (SHOP), endorsed by the National Federation of Independent Business, the National Association of Realtors, the Service Employees International Union, the National Partnership for Women & Families, Families USA, and the National Restaurant Association, addresses the number one problem for many small businesses and the self-employed -- the high cost of providing health care for their employees -- by:

  • Allowing small businesses and the self-employed to band together across state lines and spread the risk over a large number of participants in order to obtain lower premiums.
  • Providing tax credits for small business owners and the self-employed to offset contributions to employee premiums.
  • Banning health status rating in order to protect small businesses and the self-employed from large rate increases simply because one employee gets sick.

“Small businesses are the backbone of the American economy yet workers in the smallest businesses are almost three times as likely to be uninsured as those who work for the largest businesses,” said Durbin. “Health care reform is a priority of the American people and a central element of this Congress’s agenda. We must keep working together on a bipartisan basis to try to enact legislation that will give all Americans access to affordable health insurance, and solving the healthcare challenges faced by small businesses is an important part of that process.”

“As health care costs continue to skyrocket, fewer and fewer small businesses in Maine and across the country are able offer quality health insurance as a workplace benefit,” said Snowe, the Ranking Member of the Senate Committee on Small Business and Entrepreneurship. “Premiums have increased by a staggering 89 percent since 2000 and a majority of our nation’s uninsured – 52 percent – are self-employed, or work for a small business with fewer than 100 employees, or are dependent on someone who does. This legislation will finally level the playing field for American small businesses and the self-employed and allow them to pool together nationally to receive a host of new, affordable, and quality coverage options. I firmly believe that the health insurance market reform and coverage policies in the SHOP act must be included in broader health reform legislation. ” 

“The majority of uninsured Americans are self-employed individuals and employees of small businesses,” said Lincoln. “Small businesses are the number one source for jobs in Arkansas, yet only 29 percent of businesses with fewer than 50 employees offer health insurance coverage because it is simply too expensive.  Of Arkansas’s total uninsured population, more than 56 percent, or approximately 295,000 Arkansans, are employed by a firm with 100 or fewer employees. SHOP is a pragmatic model for larger health reform legislation that allows us to begin to address the needs of the millions of working uninsured Americans whose top priority is access to quality and affordable health care for their families.”

“For so many small business owners the cost of healthcare is unsustainable,” said Dan Danner, president and CEO, National Federation of Independent Business. “SHOP is a bipartisan bill that pursues uniform insurance market reforms greatly needed for our nation’s job creators. It explores new pooling options aimed at improving competition, creates new ways for small business owners to access affordable healthcare options and gives individuals the ability to choose their own plan. We commend these Senators for their continued leadership on this important issue. Enacting solutions specific to the diverse small business community is critical to advancing meaningful reform."

“NAR, for many years, has been advocating changes to the U.S. healthcare system that will make health care insurance more available and affordable to millions of self employed individuals and small businesses.  We believe that the SHOP Act, reintroduced today by Senator's Durbin, Snowe and Lincoln, recognizes the unique challenges that face the nation's self-employed who have no employer to contribute to the cost of their health insurance premiums.  The SHOP Act's reform concept provides a workable blueprint that must be incorporated into the larger debate and legislation of reforms to this nation’s health care system,” said Charles McMillan, President of the NAR.

“The current economic crisis shows just how broken America's healthcare system is - too many hardworking people are struggling to afford care or being crushed by skyrocketing costs,” said Andy Stern, President of SEIU.  “As we move toward comprehensive health care reform, this bill has important ideas of ways to help small businesses & help millions of workers, including tens of thousands of SEIU child care workers, afford the health coverage they need.”

SHOP helps small business owners and employees by making it easier for small businesses to afford health insurance for their employees:

  • SHOP will allow 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.
  • SHOP will keep prices low by offering a range of private health plans that have to compete for business.
  • SHOP will provide small business owners with an annual tax credit of up to $1,000 per employee ($2,000 for family coverage) if they pay for 60% of their employees’ premiums.
  • SHOP will provide small business owners with a bonus tax credit if they pay for more than 60% of the premiums.

Reducing employer payments for older workers or employees with a serious illness:

  • SHOP would make insurance rating based on health status and claims experience illegal so that premium increases will be more stable and predictable.
  • SHOP ensures 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. 

Providing more choices and an easier means of selecting a health insurance plan:

  • SHOP will provide a web site with comparative information about a variety of private health plans.
  • SHOP will allow new health plans to be offered nationwide but will 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.

SHOP helps the self-employed by helping to reduce the extremely high cost of purchasing health insurance in the individual insurance market:

  • SHOP will allow the self-employed to purchase insurance in the same pool as small businesses.
  • SHOP will provide self-employed individuals with a $1,800 annual tax credit ($3,600 for family coverage) to purchase health insurance. 

This is a good first step toward making things easier for small business, but it is only a first step. What do you think? We welcome your comments and will pass them along to the senators and congressmen who are working on this issue. Or, you can contact them yourself. Visit www.house.gov and www.senate.gov and make your voice heard. Either way, they need to understand how important this issue is to small businesses across America.