[Congressional Record Volume 151, Number 45 (Friday, April 15, 2005)]
[Senate]
[Pages S3749-S3751]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. FEINGOLD (for himself and Ms. Collins):
  S. 820. A bill to promote the development of health care cooperatives 
that will help businesses to pool the health care purchasing power of 
employers, and for other purposes; to the Committee on Health, 
Education, Labor, and Pensions.
  Mr. FEINGOLD. Mr. President, today, along with my colleague from 
Maine, Senator Collins, I am introducing legislation to help businesses 
form group-purchasing cooperatives to obtain enhanced benefits, to 
reduce health care rates, and to improve quality for their employees' 
health care.
  High health care costs are burdening businesses and employees across 
the Nation. These costs are digging into profits and preventing access 
to affordable health care. Too many patients feel trapped by the 
system, with decisions about their health dictated by costs rather than 
by what they need.
  Nationally, the annual average cost to an employer for an employee's 
health care is $6,348. In my home State of Wisconsin it is even 
higher--the average cost there is $7,618. We must curb these rapidly 
increasing health care costs. I strongly support initiatives to ensure 
that everyone has access to health care. It is crucial that we support 
successful local initiatives to reduce health care premiums and to 
improve the quality of employees' health care.
  By using group purchasing to obtain rate discounts, some employers 
have been able to reduce the cost of health

[[Page S3750]]

care premiums for their employees. According to the National Business 
Coalition on Health, there are nearly 80 employer-led coalitions across 
the United States that collectively purchase health care. Through these 
pools, businesses are able to proactively challenge high costs and 
inefficient delivery of health care and share information on quality. 
These coalitions represent over 10,000 employers nationwide.
  Improving the quality of health care will also lower the cost of 
care. By investing in the delivery of quality health care, we will be 
able to lower long term health care costs. Effective care, such as 
quality preventive services, can reduce overall health care 
expenditures. Health purchasing coalitions help promote these services 
and act as an employer forum for networking and education on health 
care cost containment strategies. They can help foster a dialogue with 
health care providers, insurers, and local HMOs.
  Health care markets are local. Problems with cost, quality, and 
access to health care are felt most intensely in the local markets. 
Health care coalitions can function best when they are formed and 
implemented locally. Local employers of large and small businesses have 
formed health care coalitions to track health care trends, create a 
demand for quality and safety, and encourage group purchasing.
  In Wisconsin, there have been various successful initiatives that 
have formed health care purchasing cooperatives to improve quality of 
care and to reduce cost. For example, the Employer Health Care Alliance 
Cooperative, an employer-owned and employer-directed not-for-profit 
cooperative, has developed a network of health care providers in Dane 
County and 12 surrounding counties on behalf of its 160 member 
employers. Through this pooling effort, employers are able to obtain 
affordable, high-quality health care for their 87,500 employees and 
dependents.
  This legislation seeks to build on successful local initiatives, such 
as the Alliance, that help businesses to join together to increase 
access to affordable and high-quality health care.
  The Promoting Health Care Purchasing Cooperatives Act would authorize 
grants to a group of businesses so that they could form group-
purchasing cooperatives to obtain enhanced benefits, reduce health care 
rates, and improve quality.
  This legislation offers two separate grant programs to help different 
types of businesses pool their resources and bargaining power. Both 
programs would aid businesses to form cooperatives. The first program 
would help large businesses that sponsor their own health plans, while 
the second program would help small businesses that purchase their 
health insurance.
  My bill would enable larger businesses to form cost-effective 
cooperatives that could offer quality health care through several ways. 
First, they could obtain health services through pooled purchasing from 
physicians, hospitals, home health agencies, and others. By pooling 
their experience and interests, employers involved in a coalition could 
better address essential issues, such as rising health insurance rates 
and the lack of comparable health care quality data. They would be able 
to share information regarding the quality of these services and to 
partner with these health care providers to meet the needs of their 
employees.
  For smaller businesses that purchase their health insurance, the 
formation of cooperatives would allow them to buy health insurance at 
lower prices through pooled purchasing. Also, the communication within 
these cooperatives would provide employees of small businesses with 
better information about the health care options that are available to 
them. Finally, coalitions would serve to promote quality improvements 
by facilitating partnerships between their group and the health care 
providers.
  By working together, the group could develop better quality insurance 
plans and negotiate better rates.
  This legislation also tries to alleviate the burden that our Nation's 
farmers face when trying to purchase health care for themselves, their 
families, and their employees. Because the health insurance industry 
looks upon farming as a high-risk profession, many farmers are priced 
out of, or simply not offered, health insurance. By helping farmers 
join cooperatives to purchase health insurance, we will help increase 
their health insurance options.
  Past health purchasing pool initiatives have focused only on cost and 
have tried to be all things for all people. My legislation creates an 
incentive to join the pools by giving grants to a group of similar 
businesses to form group-purchasing cooperatives. The pools are also 
given flexibility to find innovative ways to lower costs, such as 
enhancing benefits, for example, more preventive care, and improving 
quality. Finally, the cooperative structure is a proven model, which 
creates an incentive for businesses to remain in the pool because they 
will be invested in the organization.
  I am pleased that this bill is supported by the National Business 
Coalition on Health, an organization that already understands that 
allowing businesses to come together to increase their health care 
purchasing power can lead to an increase in health care quality, and a 
decrease in health care costs.
  We must reform health care in America and give employers and 
employees more options. This legislation, by providing for the 
formation of cost-effective coalitions that will also improve the 
quality of care, contributes to this essential reform process. I urge 
my colleagues to join me in cosponsoring this proposal to improve the 
quality and costs of health care.
  I ask unanimous consent that the text of the bill be printed in the 
Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                 S. 820

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Promoting Health Care 
     Purchasing Cooperatives Act''.

     SEC. 2. FINDINGS AND PURPOSE.

       (a) Findings.--Congress makes the following findings:
       (1) Health care spending in the United States has reached 
     15 percent of the Gross Domestic Product of the United 
     States, yet 45,000,000 people, or 15.6 percent of the 
     population, remains uninsured.
       (2) After nearly a decade of manageable increases in 
     commercial insurance premiums, many employers are now faced 
     with consecutive years of double digit premium increases.
       (3) Purchasing cooperatives owned by participating 
     businesses are a proven method of achieving the bargaining 
     power necessary to manage the cost and quality of employer-
     sponsored health plans and other employee benefits.
       (4) The Employer Health Care Alliance Cooperative has 
     provided its members with health care purchasing power 
     through provider contracting, data collection, activities to 
     enhance quality improvements in the health care community, 
     and activities to promote employee health care consumerism.
       (5) According to the National Business Coalition on Health, 
     there are nearly 80 employer-led coalitions across the United 
     States that collectively purchase health care, proactively 
     challenge high costs and the inefficient delivery of health 
     care, and share information on quality. These coalitions 
     represent more than 10,000 employers.
       (b) Purpose.--It is the purpose of this Act to build off of 
     successful local employer-led health insurance initiatives by 
     improving the value of their employees' health care.

     SEC. 3. GRANTS TO SELF INSURED BUSINESSES TO FORM HEALTH CARE 
                   COOPERATIVES.

       (a) Authorization.--The Secretary of Health and Human 
     Services (in this Act referred to as the ``Secretary''), 
     acting through the Director of the Agency for Healthcare 
     Research and Quality, is authorized to award grants to 
     eligible groups that meet the criteria described in 
     subsection (d), for the development of health care purchasing 
     cooperatives. Such grants may be used to provide support for 
     the professional staff of such cooperatives, and to obtain 
     contracted services for planning, development, and 
     implementation activities for establishing such health care 
     purchasing cooperatives.
       (b) Eligible Group Defined.--
       (1) In general.--In this section, the term ``eligible 
     group'' means a consortium of 2 or more self-insured 
     employers, including agricultural producers, each of which 
     are responsible for their own health insurance risk pool with 
     respect to their employees.
       (2) No transfer of risk.--Individual employers who are 
     members of an eligible group may not transfer insurance risk 
     to such group.
       (c) Application.--An eligible group desiring a grant under 
     this section shall submit to the Secretary an application at 
     such time, in such manner, and accompanied by such 
     information as the Secretary may require.
       (d) Criteria.--
       (1) Feasibility study grants.--
       (A) In general.--An eligible group may submit an 
     application under subsection (c)

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     for a grant to conduct a feasibility study concerning the 
     establishment of a health insurance purchasing cooperative. 
     The Secretary shall approve applications submitted under the 
     preceding sentence if the study will consider the criteria 
     described in paragraph (2).
       (B) Report.--After completion of a feasibility study under 
     a grant under this section, an eligible group shall submit to 
     the Secretary a report describing the results of such study.
       (2) Grant criteria.--The criteria described in this 
     paragraph include the following with respect to the eligible 
     group:
       (A) The ability of the group to effectively pool the health 
     care purchasing power of employers.
       (B) The ability of the group to provide data to employers 
     to enable such employers to make data-based decisions 
     regarding their health plans.
       (C) The ability of the group to drive quality improvement 
     in the health care community.
       (D) The ability of the group to promote health care 
     consumerism through employee education, self-care, and 
     comparative provider performance information.
       (E) The ability of the group to meet any other criteria 
     determined appropriate by the Secretary.
       (e) Cooperative Grants.--After the submission of a report 
     by an eligible group under subsection (d)(1)(B), the 
     Secretary shall determine whether to award the group a grant 
     for the establishment of a cooperative under subsection (a). 
     In making a determination under the preceding sentence, the 
     Secretary shall consider the criteria described in subsection 
     (d)(2) with respect to the group.
       (f) Cooperatives.--
       (1) In general.--An eligible group awarded a grant under 
     subsection (a) shall establish or expand a health insurance 
     purchasing cooperative that shall--
       (A) be a nonprofit organization;
       (B) be wholly owned, and democratically governed by its 
     member-employers;
       (C) exist solely to serve the membership base;
       (D) be governed by a board of directors that is 
     democratically elected by the cooperative membership using a 
     1-member, 1-vote standard; and
       (E) accept any new member in accordance with specific 
     criteria, including a limitation on the number of members, 
     determined by the Secretary.
       (2) Authorized cooperative activities.--A cooperative 
     established under paragraph (1) shall--
       (A) assist the members of the cooperative in pooling their 
     health care insurance purchasing power;
       (B) provide data to improve the ability of the members of 
     the cooperative to make data-based decisions regarding their 
     health plans;
       (C) conduct activities to enhance quality improvement in 
     the health care community;
       (D) work to promote health care consumerism through 
     employee education, self-care, and comparative provider 
     performance information; and
       (E) conduct any other activities determined appropriate by 
     the Secretary.
       (g) Review.--
       (1) In general.--Not later than 1 year after the date on 
     which grants are awarded under this section, and every 2 
     years thereafter, the Secretary shall study programs funded 
     by grants under this section and provide to the appropriate 
     committees of Congress a report on the progress of such 
     programs in improving the access of employees to quality, 
     affordable health insurance.
       (2) Sliding scale funding.--The Secretary shall use the 
     information included in the report under paragraph (1) to 
     establish a schedule for scaling back payments under this 
     section with the goal of ensuring that programs funded with 
     grants under this section are self sufficient within 10 
     years.

     SEC. 4. GRANTS TO SMALL BUSINESSES TO FORM HEALTH CARE 
                   COOPERATIVES.

       The Secretary shall carry out a grant program that is 
     identical to the grant program provided in section 3, except 
     that an eligible group for a grant under this section shall 
     be a consortium of 2 or more employers, including 
     agricultural producers, each of which--
       (1) have 99 employees or less; and
       (2) are purchasers of health insurance (are not self-
     insured) for their employees.

     SEC. 5. AUTHORIZATION OF APPROPRIATIONS.

       From the administrative funds provided to the Secretary, 
     the Secretary may use not more than a total of $60,000,000 
     for fiscal years 2006 through 2015 to carry out this Act.
                                 ______