Small business health benefits program (SBHBP)

Title XXVII of the Public Health Service Act is amended— (1)by redesignating part C as part D; and (2)by inserting after part B the following new part:

Small Business Health Benefits Program (SBHBP)

2771.

Small business health benefits program

(a)

Establishment

The Secretary shall establish a small business health benefits program under which small employers may offer health insurance coverage to employees and their dependents. (b)

Program elements

Under the SBHBP: (1)

Access to insurance

Small employers are provided access, for years beginning on or after January 1, 2007, to qualified health pooling arrangements under which their employees may elect self-only or family health insurance coverage under at least 2 health insurance coverage policies, regardless of whether premium assistance referred to in paragraph (2) is available with respect to such employer. (2)

Premium assistance for small employers

Premium assistance is available under subsection (c) to assist small employers in the payment of premiums for the health insurance coverage provided. (3)

Employer share of premiums

(A)

In general

Small employers are provided access to health insurance coverage, and may be eligible for premium assistance under subsection (c), only if they pay (before the application of any premium assistance under subsection (c)) at least 50 percent of the premiums for coverage of their employees, but such employers are not required to pay for the portion of the premiums for dependents of employees. (B)

Construction

Nothing in this section shall be construed as preventing an employee from applying the payment described in subparagraph (A) towards the payment of premiums for family health insurance coverage. (4)

Health insurance coverage

(A)

In general

Health insurance coverage offered under SBHBP shall meet the following requirements: (i)The Secretary determines that the coverage is substantially similar to health benefits coverage in any of the four largest health benefit plans (determined by enrollment) offered under chapter 89 of title 5, United States Code. (ii)The coverage complies with State laws and regulations (including applicable benefit mandates, rating requirements, and other consumer protections) for group health insurance coverage for the State in which the coverage is offered. (iii)The Secretary determines that the coverage provided to employees is coordinated, in accordance with regulations prescribed by the Secretary, with other coverage provided under governmental health benefits programs under which health benefits coverage is available to such employees. (B)

Standards for participating health insurers

In administering the program, the Secretary may consider the solvency and claims payment history of health insurers and shall promote participation by qualified health insurers that establish— (i)integration of health information technology tools to promote quality; (ii)chronic disease management; (iii)preventive health care services; and (iv)evidence-based medicine considerations of prescription drugs and other treatment that take into account the individual medical circumstances of individuals enrolled in the program. (5)

Enrollment

In administering the program, the Secretary shall provide that employee enrollment (and changes in enrollment) are limited to an annual open enrollment period, except in the case of change of employment status (including new a new employee) that affects eligibility for coverage and in the case of qualifying events (such as change in family status) specified by the Secretary and consistent with section 2701(f). (c)

Premium assistance

Under the SBHBP, the Secretary shall establish a program of premium assistance for small employers. Such program shall provide for a sliding scale of assistance to such employers taking into account the following: (1)The number of employees of the employer. (2)The average wage level of such employees relative to the average wage level for employees in the same geographic area. (3)The profit margin of the employer. (d)

Reinsurance for catastrophic costs for certain health insurance issuers

(1)

In general

In the case of health insurance coverage offered under the SBHBP by a health insurance issuer that participates in a qualified health pooling arrangement, the Secretary shall provide for reinsurance coverage for 75 percent of covered claims that exceed, for an individual for a year, an amount determined by the Secretary for such year which is not less than the minimum amount specified in paragraph (2). (2)

Minimum amount

The minimum amount specified in this paragraph is— (A)for the first year in which this section is in effect, $100,000; or (B)for a subsequent year is the minimum amount specified in this paragraph for a previous year, increased by the Secretary’s estimate of the average annual percentage increase in health insurance coverage with a median level of premiums for the previous year.

Any amount determined under subparagraph (B) which is not a multiple of $1,000 shall be rounded to the nearest multiple of $1,000.

(e)

Qualified health pooling arrangement

For purposes of this section, the term qualified health pooling arrangement means, with respect to employees employed in any State for any year— (1)except as provided in subparagraph (B), an arrangement established by (and operating under the oversight of) such State for purposes of this section, in accordance with regulations of the Secretary, which provides for pooling of health insurance coverage offered for such year in such State, and (2)in any case in which there is not in effect for any year an arrangement described in subparagraph (A) established by such State, the national health pooling arrangement established under section 3.

The Secretary shall determine, within a reasonable time prior to each year, whether there is a qualified health pooling arrangement described in paragraph (1) with respect to employees employed in any State.

(f)

Small employer defined

(1)

In general

For purposes of this part, except as otherwise provided in this subsection, the term small employer means an employer with 50 or fewer employees, as determined under regulations promulgated by the Secretary. (2)

Continuation of participation

An employer whose employees are provided health insurance coverage under the SBHBP while the employer is a small employer as defined in paragraph (1) and who thereafter has more than 50 employees shall continue to be treated as a small employer. (3)

Employers not in existence in preceding year

In the case of an employer which was not in existence for the full year prior to the date on which the employer applies to participate in SBHBP, the determination of whether such employer meets the requirements of paragraph (1) shall be based on the average number of employees that it is reasonably expected such employer will employ on business days in the employer's first full year. (4)

Waiver

The Secretary may waive the limitations relating to the size of an employer which may participate under SBHBP on a case by case basis if the Secretary determines that such employer makes a compelling case for such a waiver. In making determinations under this paragraph, the Secretary shall consider the effects of the employment of temporary and seasonal workers and other related factors. (g)

Other definitions

For purposes of this part: (1)The terms employee and dependent have the meanings given such terms by the Secretary in regulations and shall be based upon the definitions of such terms used for purposes of the Federal employee health benefits program established under chapter 89 of title 5, United States Code. The term employee includes, in the case of a partnership or sole proprietorship, a partner in the partnership or the sole proprietor, including an individual employer who has no employees. Such may include, with respect to an employer and at the employer’s option, part-time and seasonal employees. (2)The term SBHBP means the small business health benefits program established under this section. (h)

Grants for State qualified health pooling arrangements

(1)

In general

The Secretary shall provide grants to States for the establishment, initial administration, and operations of qualified health pooling arrangements described in subsection (e)(1). (2)

Authorization of appropriations

There are authorized to be appropriated such sums as may be necessary to carry out this subsection.

2772.

Establishment of national health pooling arrangement

(a)

In general

The Secretary and the Secretary of Labor, acting jointly and in consultation with the Director of the Office of Personnel Management, shall provide for— (1)the offering on a timely basis consistent with section 2771 of a national health pooling arrangement to eligible small employers; and (2)appropriate oversight over any such arrangement. (b)

Specific requirements

In carrying out subsection (a), the Secretary and the Secretary of Labor shall— (1)model the national health pooling arrangement on the Federal employees health benefits program under chapter 89 of title 5, United States Code, to the extent practicable and consistent with the other requirements of this part; (2)consistent with paragraph (1), negotiate the most affordable and substantial coverage possible for small employers; and (3)not offer any health plan under such arrangement unless the plan meets the restrictions relating to premium rates contained in the most recent Small Employer Health Insurance Availability Model Act of the National Association of Insurance Commissioners . (c)

Definitions

For purposes of this section— (1)the term national health pooling arrangement means an arrangement which provides for pooling of health insurance coverage offered for any year in all States which do not have in effect for such year an arrangement for pooling of health insurance coverage offered in such States; and (2)in connection with the national health pooling arrangement offered pursuant to this section, an individual employer shall be taken into account as an employee under this section.