Alleviating the mounting cost pressure of health care premiums on SEMA members and their workers remains a top SEMA priority. Legislation that would have permitted trade associations to offer small-business health plans (SBHPs) based on national pooling arrangements was narrowly defeated in 2006. Federal lawmakers are still seeking a consensus approach to resolve issues that produced the stalemate two years ago, such as conflicts over federal/state oversight and requiring minimum policy mandates.
A new proposal was recently introduced that may provide relief. Entitled the “Small Business Health Options Act” (SHOP), the legislation is a variation on the SEMA-supported SBHP bill, with the added benefit of a tax credit. The bill is described below.
SEMA is now working with the Small Business Health Plan Coalition, sponsored by the National Federation of Independent Businesses (NFIB) to study the legislation. Lawmakers are expected to schedule hearings and votes on the bill later this year, although enactment of any major health care reform legislation into law may not occur until 2009 or beyond due to the upcoming elections. SEMA will keep you posted on any new developments.
For additional information on this topic, please contact Brian Duggan in the SEMA Washington, D.C., office: firstname.lastname@example.org.
Pooling: The SHOP Act would provide coverage for small businesses (defined as up to 100 employees) and the self-employed through expanded private health insurance pools. It would be phased-in over a five-year period. Pooling would begin at the state level and then expand to national pools offering private health insurance through a program administered by the federal government. The pooling arrangements are aimed at reducing costs by spreading risk, administrative efficiencies and economies of scale (SBHPs would achieve the same goals, but the pooling arrangements would be created by trade associations rather than the state/federal government).
Tax Credits: The SHOP Act would provide a tax credit to help offset the cost of health coverage. Small employers who pay at least 60% of the premium would receive a tax credit of up to $1,000 for each covered employee ($2,000 for family coverage). The full credit would be available to the smallest employers (10 or fewer employees) and would be phased down as the size of the employer increases, up to a maximum of 50 employees (The SBHP legislation would not provide tax credits).
Rating Reforms: SHOP’s rating reforms should make premiums more stable and affordable from year-to-year. It would be illegal to base ratings on health status or claims experience, and other tight rating restrictions would apply to other issues, such as age, location and industry.
Administrative Improvements: Statewide and nationwide purchasing pools would offer a wide range of health plan choices, facilitate plan comparisons and provide one-stop shopping for small businesses. SHOP’s nationwide purchasing pool would offer private health plans that cover the entire nation, in addition to plans that operate only in a single state or area. Trade associations would serve as “navigators” to advertise the health insurance programs and help member companies enroll in the state/federal insurance pools.