Statements on Introduced Bills and Joint Resolutions

STATEMENTS OF INTRODUCED BILLS AND JOINT RESOLUTIONS

S. 2163. A bill to establish a national health program administered by the Office of Personnel Management to offer health benefits plans to individuals who are not Federal employees, and for other purposes; to the Committee on Finance.

Mr. DURBIN. Mr. President, today I am introducing legislation along with my colleague, Senator BLANCHE LINCOLN, which will help small businesses struggling to make health insurance available to their employees.

Health insurance premiums have risen as much as six times the rate of inflation in the past decade. Last year they rose by 13.9 percent, the fourth consecutive year of double-digit increases. Some small businesses in Illinois are facing increases as high as 40 percent annually.

According to a survey conducted by Mercer Consulting, worker health care costs have overtaken taxes as the biggest concern among small business owners; and two-thirds of them are shopping for a new health plan every year in an effort to save money.

The Conference Board, an executive research firm, conducts an annual survey of 120 CEOs. One of the questions they ask is how big an obstacle health care costs are in hiring new workers. This year, 78 percent said it was an obstacle, 35 percent said it was a major obstacle.

Health care costs are hurting small businesses, workers and the economy; and fixing this problem should be a national priority.

There are two main problems for small businesses in obtaining affordable insurance. First, there aren't many insurers offering affordable products to small groups. Many small businesses only have access to one insurer in their area, which make it hard to comparison shop. The second problem is that because of their limited size, small business don't have the purchasing or negotiating power of a big company.

The Small Employers Health Benefits Program Act of 2004 (SEHBP) will address both of these problems while maintaining insurance solvency and benefit standards.

Our bill will create a program based on the successful Federal Employees Health Benefits Program or "FEHBP," which offers Federal employees a range of private sector options at affordable prices. This new program would draw from FEHBP's strengths: plan choice, group purchasing savings, comprehensive benefits, low administrative costs and nationwide availability.

The Office of Personnel Management (OPM), which has forty years of experience running FEHBP, would set up a separate SEHBP national purchasing pool open to businesses with 100 employees or less. OPM would annually negotiate benefit packages with private health insurers interested in offering an insurance plan through the SEHBP program. OPM would send out summaries of health plans available to all participating and interested employers during an annual open enrollment season. Plan guides would include a description of each plan offered and the associated costs, as well as results of a customer satisfaction survey of the plans.

Each employee would choose a plan right for them and enroll directly with the health insurer. To help defray costs for the employers and encourage them to offer insurance to low-income employees, employers would receive an annual refundable tax credit if they agree to pay at least 60 percent of the insurance premium. The tax credit would be equal to 25 percent of the employer contribution for self-only policies, 30 percent for policies covering married couples with no dependents, and 35 percent for family policies, for workers making up to $25,000 per year.

There would also be a refundable 10 percent bonus tax credit for those employers who enroll in the first year and an additional bonus to employers who cover more than 60 percent of the premium. The bonus would be equivalent to a 5 percent add-on per additional 10 percent of premium covered. So, if an employer covers 70 percent, the employer would receive an additional 5 percent tax credit. If they cover 80 percent of the premium, they would get an additional 10 percent tax credit.

All self-employed persons and employees in small businesses of 100 employees or less would be eligible to enroll in SEHBP health plans. OPM would have the authority to grant waivers to businesses with more than 100 employees.

One of the few differences from FEHBP is that SEHBP plans would be allowed to vary premiums by age, so that younger enrollees would be more likely to enroll. The more young healthy people join the program, the lower the premiums will be for everyone.

SEHBP health plans would not be allowed to impose any preexisting condition exclusions on new SEHBP enrollees who have at least one year of health insurance coverage immediately prior to enrollment in an SEHBP plan. However, to prevent people from waiting until they get sick to enroll, health plans would be allowed to exclude coverage for known preexisting conditions for up to one year for people without coverage immediately prior to enrollment, while covering costs associated with new conditions.

Mr. President, Secretary Tommy Thompson of the Department of Health and Human Services said yesterday that people without health insurance in this country get health care. I disagree. There are millions of Americans forgoing care because they don't have access to affordable health care. Additionally, small businesses are forgoing hiring because of the cost of offering health care to new employees. These problems can and should be solved and I believe this legislation could open the door for many Americans to obtain good health insurance coverage.

SEHBP would provide small employers a way to offer their workers an array of health insurance options at a group discounted rate. With a limited administrative effort and a refundable tax credit, employers would be able to participate in a health insurance program that offers greater affordability, access and choice without compromising benefit and solvency standards.

I yield the floor.