[Congressional Record (Bound Edition), Volume 154 (2008), Part 4]
[Senate]
[Pages 4980-4981]
[From the U.S. 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

[[Page 4981]]

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 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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