Mr. President, yesterday I introduced a bipartisan bill with Senator Snowe, Senator Lincoln, and Senator Coleman to make health coverage more accessible and affordable for small businesses and the self-employed. 

In Illinois and across the nation, families and individuals agonize over the availability and rising cost of health insurance.  Those who don’t have health insurance desperately want it.  And those who have health coverage realize how easily they could lose it.

Health insurance premiums continue to rise faster than wages and the rate of inflation, placing a great strain on businesses and family budgets.   

We are seeing the consequences.  People are less likely to receive health coverage through their employer today than in 2000.  And the number of uninsured Americans has soared to 47 million, largely because of this drop in employer-sponsored coverage.

While everyone is struggling with rising health costs and reduced health coverage, small businesses and the self-employed experience these problems most acutely.

Workers in the smallest businesses are almost three times as likely to be uninsured as those who work for the largest businesses.

And when you look at who makes up the uninsured, you find that over 60 percent are either self-employed or work for business with fewer than 100 employees.

This disparity is not because small businesses don’t want to offer health insurance.  It occurs because small businesses face more obstacles than large employers when they seek coverage.

• Administrative costs for health insurance are higher for small businesses than larger businesses.  About 20-25% of a small business’s premium goes to administrative expenses, compared to about 10% for large employers.
• Small businesses are less able to spread the risk of someone getting sick than large employers.  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 employers and employees to cover the cost of health coverage.

Our bill addresses each of these problems.

This is not comprehensive health care reform.  We leave that to the next President. 

But our legislation addresses one of the most serious weaknesses in our current health coverage system, by making health coverage more accessible and affordable for small businesses and the self-employed, which.

More than a year ago, Senator Lincoln and I reached out to the National Federation of Independent Business and the National Association of Realtors to see if it was possible to find common ground on an issue that previously could not move forward in a closely divided Senate.  We indicated a willingness to make changes to the approach we took during the previous Congress, and they expressed a desire to work with us to try to find a middle ground that would allow us to move forward in a bipartisan manner.

Over the course of many months, we have succeeded in finding that middle ground.  With the contributions of Senators Snowe and Coleman, we have developed a bill that provides practical solutions to the very real problems small businesses and the self-employed face in today’s health insurance system.

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, provide more private health insurance plans for employers and employees to choose from, and enhance competition by making it easier to compare those plans and pick the one that best meets particular needs. 

Our bill would prohibit insurers from setting premiums based on health status in both the national SHOP pool and in states’ small group markets.  Over time, the rating rules in SHOP would reduce insurers’ ability to use other factors in setting premiums in order to reduce the wide variation in premiums that often exists today.  The bill would provide incentives for states to adopt similar rating rules.  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 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.  The 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 begin moving to a system where individual employees would be able to choose their own health plan instead of having their employer choose.  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. 

I am pleased that the National Federation of Independent Business and the National Association of Realtors support the bill.

I am also delighted that this is a bipartisan bill.  We reached out to Senator Snowe last year, and she has made valuable contributions to this bill.  We are pleased that Senator Coleman also has joined us as a cosponsor of the bill.

I am also glad to say the Service Employees International Union is supporting our bill.  It is a true sign of our ability to find a reasonable middle ground that such a diverse group has come together to support this bill.   

We recognize that other Senators, on both sides of the aisle, have a sincere interest in addressing the problems small businesses and the self-employed are facing.  We are committed to working with them to see if an even broader consensus can be found.

I hope my colleagues will take a close look at what we have developed so far and join with us in the fight to expand small businesses’ access to affordable health insurance.