Cantwell Seeks to Help Small Businesses Provide Affordable Health Insurance to Employees
New legislation would allow small businesses to join together, leverage group purchasing power to cut costs and promote choice
WASHINGTON, DC – Tuesday, U.S. Senator Maria Cantwell (D-WA) joined Senators Max Baucus (D-MT), Richard Durbin (D-IL), Blanche Lincoln (D-AR) and others in introducing legislation to create an affordable health insurance program for America’s small businesses. The proposed Small Employers Health Benefits Program (SEHBP) would let small business join together to pool risk and leverage purchasing power, reducing costs and promoting choice between competing plans.
“I’ve met with dozens of small business owners from across Washington state who tell me they want to help their employees pay for health insurance, but simply can’t afford the cost,” said Cantwell. “Our proposal would help get costs down to a level these employers can afford. By letting employees make decisions for themselves, while handling all the oversight at the federal level, our plan would streamline the process, control costs, promote choice, and reduce the burden placed on small businesses. By helping employers join together, we can help small businesses get affordable, quality health care to employees and their families.”
All employers with 100 employees or fewer, and businesses with more than 100 employees that receive a waiver, would be eligible to participate in SEHBP. The employees themselves would choose which plan, if any, they want to join. To receive a tax credit, employers must first cover 60 percent of each employee’s health insurance premium. Employers who elect to cover more than 60 percent of the premium would receive a 5 percent tax credit for every additional 10 percent of the premium they paid. Employers would also receive a 25 percent tax credit for the first 60 percent of premiums they paid for employees making less than $25,000 per year. The credit would increase for family coverage.
The SEHBP Act, cosponsored by Cantwell, is based on the successful, decades-old Federal Employees Health Benefits Program (FEHBP), which provides extensive benefit choices at affordable prices to Congressional and federal employees. In 2005, the FEHBP purchasing pool included more that eight million people, with 249 private insurance plans competing for their business. The Office of Personnel Management (OPM), which oversees FEHBP, would manage SEHBP and ensure compliance by the private insurers wishing to compete for the business of program participants. This would guarantee that small business employees receive appropriate benefits at reasonable prices, reduce administrative costs, and free business owners from the burden of negotiating with health plans. Current OPM administrative costs equal less than one percent of the cost of the insurance plans the agency oversees.
SEHBP enrollees in local plans will be covered by state consumer protection laws such as benefit mandates and solvency standards. State insurance commissioners will continue to regulate solvency and grievance processes. National plans will be required to provide similar protections under the oversight of OPM.
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