Mr. President, I rise today to join with my colleagues Senators Durbin, Coleman, and Lincoln, to introduce the landmark Small Business Health Options Program Act of 2008 or the SHOP Act because after…
Mr. President, I rise today to join with my colleagues Senators Durbin, Coleman, and Lincoln, to introduce the landmark Small Business Health Options Program Act of 2008 or the SHOP Act because after more than 10 years of discussion in Congress of this No. 1 priority for America's small businesses, this bill should finally be the vehicle that brings us to the finish line in passing legislation that's critical not only to our small businesses but also to millions of America's uninsured.
This compromise proposal represents the culmination of 15 months of coming together, of reaching across the partisan divide, to fashion a workable solution to pass this year. So I want to thank Assistant Majority Leader Durbin for his steadfast and stalwart leadership on this issue--he has been a true champion in this cause--and Senator Lincoln, my esteemed colleague on the Senate Finance Committee--she and I had pledged to work together on small business health insurance at the start of this Congress--for her remarkable
dedication to making this moment possible. I also thank Senator Coleman, who recently held a Small Business Committee field hearing on health insurance reform in St. Paul, Minnesota, for joining us and for his staunch support of our Nation's small businesses.
As former chair and now ranking member of the Senate Small Business Committee, if there is one concern I have heard time and again--from small businesses in Maine and across the country--it is the exorbitant cost to small businesses of providing health insurance to their employees. Throughout America, health insurance premiums have increased by a staggering 78 percent since 2001--far outpacing inflation and wage gains. In Maine, annual premiums in the small group market now average an astronomical $4,868 for individual coverage and $14,605 for a family plan. Just recently a group of Maine small businesses told me that, incredibly, the most ``affordable'' insurance policies available to them included a $636 monthly premium with a $2,500 annual deductible
This is just simply unacceptable. And the reality of these unreal increases is that it perpetuates a vicious cycle of spiraling costs and declining access--as fewer and fewer small businesses can afford to offer health insurance to their employees. Today, only 45 percent of our smallest businesses are able to provide this workplace benefit--a 13-percent drop from 2002. No wonder that nearly 9 out of 10 to firms told the National Association of Manufacturers last year that the cost of health insurance is one of their top-three concerns--even above Government regulations and foreign competition. And when you couple all this with the fact there are already around 47 million uninsured in America, shouldn't we be helping to add to the rolls of the insured, rather than the uninsured? What exactly is there not to get when the status quo absolutely makes no sense?
That is why in the 108th and 109th Congresses, when I was chair of the Small Business Committee, I championed a Small Business Health Insurance Plan bill the full Senate considered back in May 2006--thanks largely to the stewardship of Senator Enzi--and we came up just a handful of votes short. At the same time, Senators Durbin and Lincoln advocated for a different approach, the Small Employer Health Benefits Program. Yet, regrettably, Congress has failed to muster the bipartisan support to pass either of these measures--despite overwhelming public support, on both sides of the aisle, to pass something.
Well, the clock has been ticking for far too long for America's small businesses--and with this bill, we believe their hour may have finally arrived because with the SHOP Act, we blend the best of the previous approaches and address the major concerns critics have expressed in a package that both the National Federation of Independent Businesses, the National Association of Realtors, and the Service Employees International Union agree on--and that is what I call a diverse base of support that speaks volumes for this bill's chances for success.
In short, we make health insurance more affordable and accessible by encouraging development of State-based purchasing pools backstopped by a voluntary, nationwide small business risk pool. The SHOP Act maintains the basic premise of allowing small businesses and the self- employed to pool together, across State lines--just as larger employers are able to do--to secure quality coverage that is more affordable, thanks to a reduction in administrative costs, which today account for an astonishing 25 percent of small business premiums--compared to just 10 percent for large employers.
So the creation of these purchasing pools will increase competition among insurers and provide more coverage choices for small businesses. And that is all the more critical as small group insurance markets-- like those in Maine--currently have no real competition. In fact, the largest insurers now control 43 percent of the small group markets, and in Maine, a sum total of 4 large insurers now control 98 percent of the small group market. This cannot be allowed to continue because no competition means higher costs. Higher costs mean no health insurance. And we need more insured in America, not fewer.
Moreover, under the SHOP Act, business and trade associations would serve as health plan ``navigators,'' helping employers and employees alike with enrollment in health insurance plans and in responding to questions and distributing information about SHOP. And to assist small employers who offer health insurance, we provide a targeted tax credit of up to $1,000 for each covered employee, and $2,000 for family coverage--with a bonus credit for employers who contribute more than 60 percent of the premium--encouraging our Nation's smallest businesses to offer health insurance for their employees as a workplace benefit.
But perhaps most significantly, what this bill does that others have not is it resolves the persistent policy concerns that have thwarted previous attempts to pass small business health insurance legislation in the Senate.
As we know, some have voiced concern that small business health insurance plans could offer stripped-down, ``bare-bones'' coverage plans that would leave out such key benefits as cancer screenings, diabetic supplies, mammograms, and maternity care. Well, we agree and we address this concern by requiring SHOP's nationwide plans to meet or exceed a minimum benefit ``floor'' to be developed by the nonpartisan and highly respected National Academies of Science's Institute of Medicine--based on clinically appropriate and affordable practices in today's small group market. So this issue of coverage should no longer be a legitimate roadblock.
Others have said that small business health insurance legislation could drive up premium costs for all those who don't participate in these new small business plans because these plans would be playing by different and more advantageous rules. They have been concerned that, as a result, companies would set up plans that would attract a healthier pool of individuals--who would pay lower premiums--while potentially relegating the less healthy to existing group or individual plans that would then have to raise premiums.
So we worked closely with the nonpartisan National Association of Insurance Commissioners to create strong incentives for states to ensure a level playing field for all plans--both inside and outside of SHOP. We say, if you want the small businesses in your State to be eligible for that targeted tax credit of up to $1,000 for individual employees and $2,000 for family coverage that's included in our bill, you must have rules prohibiting ``health status'' as a factor for varying insurance and reducing excessive variations for other factors. As an additional benefit to the self-employed, States must also ensure that those individuals have the option to purchase a small group plan-- rather than being left with only the far more expensive option of the individual insurance market.
Still others have expressed concerns about a potential role of the Federal Government in insurance regulation, which has traditionally been left to the States. So under the SHOP Act, we ensure that State insurance commissioners--not the Federal Government--would handle all consumer complaints about health plans and would be responsible for ensuring that all SHOP health plans operating in their State meet State requirements for financial solvency and for grievance claim and appeals procedures.
In conclusion, for all of these reasons I firmly believe they Small Business Health Options Program Act represents our best hope for achieving passage this Congress. By addressing the major concerns about previous legislation, frankly there is now no longer any good reason we cannot make it happen. I look forward to working with Chairman Baucus and Ranking Member Grassley on the Finance Committee to consider this bipartisan measure, so it can be passed by the full Senate.