House Committee Introduces Bill That Would Allow Small Businesses To Form Health Insurance Cooperatives

Main Category: Health Insurance / Medical Insurance
Article Date: 25 Jul 2008 - 12:00 PDT

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The House Small Business Committee introduced a bill Wednesday that would help small businesses provide their employees health insurance by allowing the companies to form health insurance purchasing cooperatives and by offering them a refundable tax credit of 65% of the cost of the insurance, the Wichita Eagle reports.

Under the Small Business Cooperative for Healthcare Options to Improve Coverage for Employees Act of 2008, tax credits would be available to companies with no more than 100 employees. Eligible employers also would have to subsidize at least 65% of individual health coverage and up to 35% for family coverage, as well as offer a wellness program. Employers who previously did not offer subsidized health insurance would receive a 5% bonus tax credit.

Committee Chair Nydia Velazquez (D-N.Y.) said, "Small businesses should not have to choose between providing health benefits to their employees and keeping their doors open. The CHOICE Act will lower premiums while giving entrepreneurs the flexibility they need to ensure millions of Americans have access to health coverage" (Atwater, Wichita Eagle, 7/24).

Committee spokesperson Jaime Zapata said, "It's a bipartisan piece of legislation ... and it takes the best elements" of the plans of presumptive Democratic presidential nominee Sen. Barack Obama (Ill.) and presumptive Republican presidential nominee Sen. John McCain (Ariz.) (McLoone, "Small Business," Washington Post, 7/23). Zapata said, "It has both tax elements and a pooling mechanism. Unlike other legislation, however, the CHOICE Act creates a cooperative that can work with existing state law" (Wichita Eagle, 7/24).

According to the National Cooperative Business Association, while some health insurance cooperatives have been successful, "some studies indicate that they face substantial barriers offering members better prices." Such barriers could include health provider hostility, state regulation and insufficient negotiating power due to an inability to attract slightly larger employers, according to the association ("Small Business," Washington Post, 7/23).

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