Statements On Introduced Bills And Joint Resolutions
Floor Speech
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By Mr. DURBIN (for himself, Ms. SNOWE, and Mrs. LINCOLN):
S. 979. A bill to amend the Public Health Service Act to establish a nationwide health insurance purchasing pool for small businesses and the self-employed that would offer a choice of private health plans and make health coverage more affordable, predictable, and accessible; to the Committee on Finance.
Mr. DURBIN. Mr. President, I rise today to introduce legislation with Senators SNOWE and LINCOLN to make healthcare more affordable and accessible for our nation's small businesses and self-employed individuals. This bipartisan legislation is known as the Small Business Health Options Program Act, or the SHOP Act, and I am working with the Finance and HELP Committees to incorporate it into the broader healthcare reform bill the Senate is developing.
Health reform is a priority of the American people and a central element of this Congress's agenda. While more must be done, we have taken some small but important steps already.
We expanded the CHIP program to provide healthcare to an additional 4 million children who are uninsured today.
We provided assistance to laid-off workers to help them pay for health insurance under the COBRA continuation program, so that families receiving an average monthly unemployment check of $1,300 aren't expected to pay $1,100 in insurance premiums.
We included in the Recovery Act $87 billion for the Medicaid program over the next 2 years.
We provided $2 billion for community health centers, which serve more than 18 million patients.
But we have more to do. Overall, 46 million Americans are uninsured. At the beginning of this decade, fewer than 40 million people were uninsured. Over the same period, health insurance premiums have risen 4 times faster than wages.
This is the year to enact reforms to reduce healthcare costs, expand coverage, and improve the quality of the healthcare we receive.
It is not easy for small businesses and the self-employed to afford health insurance. Without the benefits of large group purchasing, double-digit rate increases are not uncommon.
The recession has made it worse. The Main Street Alliance recently polled nearly 500 small businesses in a dozen states and found that 35 percent have reduced coverage and 12 percent have dropped it altogether in the past 2 years.
More than 50 percent of the uninsured in America are in households led by someone who is either self-employed or works for a business with fewer than 100 employees.
Workers in the smallest businesses are almost three times likely to be uninsured as those who work for the largest businesses. That is not because small businesses don't want to offer health insurance; it is because insurance is more expensive for them than for large companies.
Administrative costs for health insurance are higher for small businesses than larger businesses. About 20-25 percent of a small business's premium goes to administrative expenses, compared to about 10 percent for large employers.
Small businesses are less able than large employers to spread the risk that someone will get sick. Even a single employee with a serious medical condition can cause a dramatic increase in a small business's health insurance premium.
Small businesses are also more likely to have lower wages and narrower profit margins than large businesses, making it more difficult for these employers and employees to cover the cost of health coverage.
Small business owners like Doug Mayol of Springfield, IL, and David Borris, of Northbrook, IL, know all too well the difficulty of maintaining health insurance in this struggling economy.
Since 1988, Doug Mayol has owned and operated a small business in downtown Springfield that sells cards, gifts, and other knick-knacks. He has found that his profits are at the mercy of the rising costs of healthcare. He is fortunate that his only employee is over 65 and qualifies for Medicare and also receives spousal benefits from her late husband. If this were not the case, Doug does not think he would be able to provide her with coverage.
In terms of his own insurance, Doug has a preexisting condition and fears the real possibility of becoming uninsured. Almost 30 years ago, Doug was diagnosed with a congenital heart valve defect. He has no symptoms, but without regular healthcare he is at risk of developing serious problems.
Like most Americans, his healthcare premiums have risen over the years, but recently the increases have been dramatic. In 2001, he paid $200 a month. By 2005, he was paying $400 a month. The next year, after he turned 50, his rate shot up to $750 a month.
Trying to work within the system, he chose a smaller network of providers and a higher deductible to bring his premium back down to $650. Unfortunately, last year it jumped to $1037 a month. Only by taking the highest deductible allowed, $2500, was he able to bring it down to $888. And these rates will continue to rise.
Ironically, Doug is not even a costly patient. With his high deductible, his insurance rarely kicks in, as he has never made a claim for illness or injury and has received only routine primary care. Yet more affordable insurance carriers reject him due to his preexisting condition.
Meanwhile, Doug avoids seeing a cardiologist, even though periodic visits would be a good idea, because he fears it would add another red flag to his already imperfect health record.
What kind of healthcare system is it that causes even those with coverage to avoid care? Americans need the peace-of-mind that comes with knowing that health insurance companies will not be able to reject you, or keep raising your rates, because you have a preexisting condition.
David Borris faces another dilemma. David is the owner of Hel's Kitchen Catering, an off-premise catering company located along suburban Chicago's north shore in Northbrook, IL. Over 2 decades ago, David and his wife opened their business in a 900 square foot storefront with a handful of recipes from his mother and his wife. Both David and his wife left good-paying jobs in the hospitality industry to take their shot at the American dream of owning their own business.
David now employs 25 full-time employees and has offered health insurance to them since 1992. At first, David offered to contribute 50 percent of the premium in an employee's first year and 100 percent thereafter. The company had 8 full-time employees and David felt a moral obligation to offer insurance to the people who were helping to grow his business.
Around 2002, the company started to see staggering premium increases. In 2004, the premium jumped 21 percent. In 2005, it increased by 10 percent. In 2006, the increase was 16 percent. In 2007, he was quoted a 26 percent rate hike, and only a change of carriers allowed him to hold the increase to 17 percent. In total, his premiums have doubled since 2002, forcing him to ask longtime employees to contribute toward the cost of the premiums.
Today, David insures only 13 of his 25 full-time employees--the other 12 cannot afford their 50 percent share of the premium in the first year, and the company cannot afford to pay more.
David spent almost 13 percent of his covered employees' payroll on health insurance premiums last year, and he expects he will have to ask employees to contribute more again next year.
He knows that one employee's wife has a kidney problem and another employee's son receives an expensive treatment for a health condition. Trying to maintain health coverage for his loyal workers has become a major complication as he tries to grow his business.
Both Doug and David are living the American dream as small business owners. Providing health insurance for their employees should not destroy that dream.
As Congress works to reform the healthcare system, we need to keep in mind the struggle of small business owners like Doug and David. Small businesses are the backbone of the American economy. They need to be able to count on health insurance premiums that are reasonable and predictable. They need something better than our current system offers.
That is why I am reintroducing the SHOP Act with Senators SNOWE and LINCOLN. Our legislation offers new hope for entrepreneurs who struggle to afford health insurance. It will make health insurance more accessible and more affordable for small businesses and the self-employed.
Our bill has three core elements: purchasing pools for small businesses and the self-employed; health insurance rating reforms; and tax credits.
Our bill would create incentives for States to establish purchasing pools and would create a national pool that we call SHOP, the Small Business
Health Options Program, for small businesses with up to 100 employees and for the self-employed.
Purchasing pools will lower administrative costs, give employers and employees more private health insurance plans to choose from, and enhance competition by making it easier to compare plans.
Our bill would prohibit insurers from setting premiums based on health status in both the national SHOP pool and in States' small group markets, and would gradually reduce other sources of premium variation. These rating changes will make premiums more stable from year to year and make coverage more affordable for those who need it most.
To lower the cost of providing health coverage, our bill would provide a tax credit to small businesses with up to 50 workers who pay at least 60 percent of their employees' premiums.
The size of the tax credit would be targeted to the size of the business. A full tax credit of $1,000 for self-only coverage and $2,000 for family coverage would be available to the smallest businesses, with the value of the tax credit phased down as the size of the employer increases.
Employers who cover more than 60 percent of the premium would be rewarded with a bonus credit.
In addition, we would move to a system where individual employees can choose their own health plan instead of having their employer choose it for them. Where rating rules permit it, each worker would be able to enroll in the health plan in SHOP that best meets his or her needs.
The bill we have introduced reflects our commitment to find reasonable compromises and address the challenges faced by small employers and the self-employed. This bipartisan legislation has the support of a range of business, labor, and consumer groups.
We have worked closely with the National Federation of Independent Business, the National Association of Realtors, and SEIU in the development of the bill, and we also have the support of Families USA, the National Restaurant Association, and the Partnership for Women and Families.
We have received valuable input from the National Association of Insurance Commissioners and have taken the hard steps they have recommended to address rating issues and ensure that the approach is viable over the long haul.
Although each group that supports SHOP has its own priorities for broader health reform, this diverse coalition of stakeholders from across the political spectrum came together to address the needs of small businesses as one important component of reform.
Everyone understands that this bill is not comprehensive health reform, and none of us would stop with SHOP. However, the renewed focus on broader reform has given us an opportunity to offer SHOP as a carefully-crafted component of broader reform that addresses the specific needs of the small business community. We believe our approach is consistent with the broader conversation and can help the greater reform effort move forward on a bipartisan basis, and we look forward to including the features of SHOP in the broader bill.
In a town hall meeting in March this year, the President spoke to a crowd about the new mindset of this Administration. He talked about ``understanding that we're all in this together and that if the middle class is working well, if working people are doing well, then everybody does well.''
This bill is consistent with that thinking. Its seemingly disparate supporters may disagree on many things, but they have worked together to develop this legislation because they agree on a greater principle: that our current system is hurting everyone--families, businesses, and our economy.
We must keep working together on a bipartisan basis to try to enact legislation that will give all Americans access to affordable health insurance, and solving the healthcare challenges faced by small businesses is an important part of that process.
I look forward to working with my colleagues to enact such legislation and ensure that the healthcare needs of small businesses and all Americans are met.
Mr. President, I ask unanimous consent that the text of the bill be printed in the RECORD.
There being no objection, the text of the bill was ordered to be placed in the RECORD
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