House Small Business Panel to Unveil Health Care Bill

House Small Business Committee Chairwoman Nydia Velazquez plans to unveil health care legislation this afternoon in a Capitol Hill news conference.

The Small Business Cooperative for Healthcare Options to Improve Coverage for Employees Act (Small Business CHOICE) is designed to encourage small firms to join health insurance cooperatives. The bill's main co-sponsor is Rep. Joseph Pitts (R-Pa.).

These purchasing cooperatives enable small businesses, which usually operate within the boundaries of a particular state, to collectively negotiate for improved health insurance for employees.

Small businesses are currently able to form these co-ops, but the bill would increase the incentive to do so by offering a refundable tax credit to small firms with no more than 100 employees that join a cooperative. The tax credit would be 65 percent of the cost of insurance. If the employer didn't previously offer subsidized health insurance to employees, an additional bonus tax credit would apply.

The employer also would be required to subsidize at least 65 percent of self-only coverage and up to 35 percent of family coverage. The solvency and benefit requirements would remain governed by state law.

Committee spokesman Jaime Zapata said the bill takes elements of health care plans put forward by presidential contenders Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.). "It's a bipartisan piece of legislation which has always worked well for the committee and it takes the best elements" of each candidate's plan, said Zapata.

Research by the National Cooperative Business Association found that some of these health insurance cooperatives have been successful, "but some studies indicate that they face substantial barriers to offering members better prices." These barriers may include state regulation or hostility among health plan providers toward the co-ops. Co-ops also may be able to attract only the smallest employers and may find they are too small to leverage sufficient negotiating power with insurers.

Molly Brogan, vice president of public affairs at the National Small Business Association, said of the new measure: "Anything that people are going to try and do to reduce health care costs we applaud. Anything to help is a step in the right direction, but [we] are focused on truly broad reform."

By Sharon McLoone |  July 23, 2008; 1:39 PM ET Regulation Legislation
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