Senator Durbin Introduces Bipartisan Legislation to Provide Affordable Health Insurance Plan for Small Businesses

August 4, 2008 -- HAZEL CREST, IL – U.S. Senator Dick Durbin (D-IL) met with local small business owners and realtors to discuss breakthrough legislation he authored with support from business and labor groups, designed to make insurance more available and affordable for the 1.8 million employees of Illinois' 250,000 small businesses and for half a million people who are self-employed in Illinois.

The bi-partisan legislation was introduced in partnership with Senators Olympia Snowe (R-Maine), Blanche Lincoln (D-Ark.) and Norm Coleman (R-Minn.). Nationwide, there are 47.1 million employees in 5.8 million small businesses and 14.1 million self-employed individuals.

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The Small Business Health Options Program (SHOP) 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 to band together and spread the risk over a large number of participants in order to obtain lower premiums.
* Providing tax credits for small business owners to offset contributions to employee premiums.
* Banning health status rating in order to protect businesses from large rate increases simply because one employee gets sick.

“After over a year of negotiations, I am pleased to announce an historic coalition supporting legislation to make health insurance more affordable for the 47.1 million workers in our nation’s small businesses and the 14.1 million self-employed persons,” said Durbin. “Contrary to popular belief, most people who don’t have insurance are not out of work -- in fact, they work full time in small businesses that cannot afford health insurance for their workers. Small business owners across America are trying to do their part to help provide their employees with health insurance, but they are struggling with annual double-digit premium increases. This bill helps solve that problem.”

“We commend this bipartisan group of Senators for supporting small business and working to address their No. 1 concern – the ever-increasing cost of healthcare,” said Todd Stottlemyer, president and CEO of NFIB. “The pooling options and tax credits outlined in this bill directly reflect on NFIB’s Small Business Principles for Healthcare Reform, helping to stabilize costs and incentivizing small businesses. We will continue to work with leaders in Congress to pursue new approaches to addressing the healthcare crisis that continues to burden America’s job creators.”

"For many Realtors and those with families, the total cost of health insurance can rival or even exceed their monthly mortgage,” said Charles McMillan, the President-Elect of the National Association of Realtors. “This bill will empower trade associations and other organizations to help guide their self-employed and small business members through the process of finding coverage."

SHOP helps small business owners and employees by addressing the 3 top problems facing small businesses:

Small businesses find it difficult 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.

Small business owners pay higher prices when they have older workers and face large premium hikes when even one employee experiences 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.

Selecting a health insurance plan is confusing and choices are often limited:

* 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:

Self-employed individuals face extremely high costs when trying to purchase 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.

Source: Senator Dick Durbin