[Congressional Record Volume 154, Number 52 (Thursday, April 3, 2008)]
[Senate]
[Pages S2425-S2426]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
SMALL BUSINESS HEALTH OPTIONS PROGRAM (SHOP) ACT
Mr. DURBIN. Mr. President, yesterday I introduced a bipartisan bill
with Senator Snowe, Senator Lincoln, and Senator Coleman to make health
coverage more accessible and affordable for small businesses and the
self-employed.
In Illinois and across the Nation, families and individuals agonize
over the availability and rising cost of health insurance. Those who
don't have health insurance desperately want it. And those who have
health coverage realize how easily they could lose it.
Health insurance premiums continue to rise faster than wages and the
rate of inflation, placing a great strain on businesses and family
budgets.
We are seeing the consequences. People are less likely to receive
health coverage through their employer today than in 2000. And the
number of uninsured Americans has soared to 47 million, largely because
of this drop in employer-sponsored coverage.
While everyone is struggling with rising health costs and reduced
health coverage, small businesses and the self-employed experience
these problems most acutely.
Workers in the smallest businesses are almost three times as likely
to be uninsured as those who work for the largest businesses.
And when you look at who makes up the uninsured, you find that over
60 percent are either self-employed or work for business with fewer
than 100 employees.
This disparity is not because small businesses don't want to offer
health insurance. It occurs because small businesses face more
obstacles than large employers when they seek coverage.
Administrative costs for health insurance are higher for small
businesses than larger businesses. About 20-25 percent of a small
business's premium goes to administrative expenses, compared to about
10 percent for large employers. Small businesses are less able to
spread the risk of someone getting sick than large employers. Even a
single employee with a serious medical condition can cause a dramatic
increase in a small business's health insurance premium. Small
businesses are also more likely to have lower wages and narrower profit
margins than large businesses, making it more difficult for employers
and employees to cover the cost of health coverage. Our bill addresses
each of these problems. This is not comprehensive health care reform.
We leave that to the next President.
But our legislation addresses one of the most serious weaknesses in
our current health coverage system, by making health coverage more
accessible and affordable for small businesses and the self-employed.
More than a year ago, Senator Lincoln and I reached out to the
National Federation of Independent Business and the National
Association of Realtors to see if it was possible to find common ground
on an issue that previously could not move forward in a closely divided
Senate. We indicated a willingness to make changes to the approach we
took during the previous Congress, and they expressed a desire to work
with us to try to find a middle ground that would allow us to move
forward in a bipartisan manner.
Over the course of many months, we have succeeded in finding that
middle ground. With the contributions of Senators Snowe and Coleman, we
have developed a bill that provides practical solutions to the very
real problems small businesses and the self-employed face in today's
health insurance system.
Our bill has three core elements: purchasing pools for small
businesses and the self-employed; health insurance rating reforms; and
tax credits.
Our bill would create incentives for States to establish purchasing
pools and would create a national pool that we call SHOP, the Small
Business Health Options Program, for small businesses with up to 100
employees
[[Page S2426]]
and for the self-employed. Purchasing pools will lower administrative
costs, provide more private health insurance plans for employers and
employees to choose from, and enhance competition by making it easier
to compare those plans and pick the one that best meets particular
needs.
Our bill would prohibit insurers from setting premiums based on
health status in both the national SHOP pool and in States' small group
markets. Over time, the rating rules in SHOP would reduce insurers'
ability to use other factors in setting premiums in order to reduce the
wide variation in premiums that often exists today. The bill would
provide incentives for states to adopt similar rating rules. These
rating changes will make premiums more stable from year to year and
make coverage more affordable for those who need it most.
To lower the cost of health coverage, our bill would provide a tax
credit to small businesses with up to 50 workers who pay at least 60
percent of their employees' premiums. The size of the tax credit would
be targeted to the size of the business. The full tax credit of $1,000
for self-only coverage and $2,000 for family coverage would be
available to the smallest businesses, with the value of the tax credit
phased down as the size of the employer increases. Employers who cover
more than 60 percent of the premium would be rewarded with a bonus
credit.
In addition, we would begin moving to a system where individual
employees would be able to choose their own health plan instead of
having their employer choose. Where rating rules permit it, each worker
would be able to enroll in the health plan in SHOP that best meets his
or her needs.
The bill we have introduced reflects our commitment to find
reasonable compromises and address the challenges faced by small
employers and the self-employed.
I am pleased that the National Federation of Independent Business and
the National Association of Realtors support the bill.
I am also delighted that this is a bipartisan bill. We reached out to
Senator Snowe last year, and she has made valuable contributions to
this bill. We are pleased that Senator Coleman also has joined us as a
cosponsor of the bill.
I am also glad to say the Service Employees International Union is
supporting our bill. It is a true sign of our ability to find a
reasonable middle ground that such a diverse group has come together to
support this bill.
We recognize that other Senators, on both sides of the aisle, have a
sincere interest in addressing the problems small businesses and the
self-employed are facing. We are committed to working with them to see
if an even broader consensus can be found.
I hope my colleagues will take a close look at what we have developed
so far and join with us in the fight to expand small businesses' access
to affordable health insurance.
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