Senators Propose Plan to Help Small Businesses Pay for Health Coverage

Congress is gearing up for the big battle for health-care coverage, expected to come to the fore this summer. In the meantime, ideas for small businesses are beginning to surface.

The newest proposal comes from Senators Dick Durbin (D-Ill.), Olympia Snowe (R-Maine) and Blanche Lincoln (D-Ark.). More than half of the nation’s uninsured, they point out, are self-employed, work for a small business, or are a dependent of someone who works for a small business. Fix small-business coverage, and you fix a big part of the health-care problem.

They’ve tagged their proposal the Small Business Health Options Program, or SHOP, and it has three major components. First, allow small businesses to band together across state lines to spread risk and lower premiums. Second, provide tax credits to help offset contributions to employees’ coverage. Third, don’t let insurance companies tag people with a rating based on health status, which penalizes those with health issues and can hike rates across companies where one employee fell ill.

“This legislation will finally level the playing field for American small businesses and the self-employed and allow them to pool together nationally to receive a host of new, affordable, and quality coverage options,” Senator Snowe said in a statement. Here’s the full release.

Is it enough to make a difference? Some probably won’t think so. The proposal suggests a $1,000 credit per employee, per year, or $2,000 for family coverage – if business owners cover 60% of their employees’ premiums. There’s a bonus – unspecified – for those who cover more than 60%. Under the plan, self-employed workers would get an $1,800 annual tax credit, or $3,600 for families, to go toward health insurance.

The proposal, of course, doesn’t do anything to address the dramatically rising cost of coverage – the vast, underlying issue. So in that sense, it’s just a band-aid where we really need some major surgery.

Readers, does this plan sound like a good start to making health coverage more affordable for small businesses?

more