A Bipartisan Small Group Reform Bill?...

Here's the good news: a bipartisan group of Senators managed to craft a small group health insurance reform bill which would enable groups of small businesses and self-employed individuals to form large purchasing pools, eliminate underwriting discrimination against the self-employed, reduce insurer administrative costs, and provide tax relief and other incentives for purchasing health coverage through large group purchasing plans.

The bad news: it was introduced in the waning days of the previous Congress. But it could be a roadmap for bipartisan small group reform as Congress re-convenes next week.

The bill was S2795, with the tortured acronym the SHOP Act (for "The Small Business Health Act Options Program Act"). It was introduced by a bipartisan group of senators as an improvement to S1955, which would have established the ground rules for development of large, association-based Small Business Health Plans, and laid the groundwork for a national market for health coverage. S1955 had the support of many national trade and business associations, but was undercut by objections from the insurance industry, and from local organizations like Chambers of Commerce, which derive a lot of revenue from proprietary health plans and feared the emergence of large national association competitors.

Even though it went nowhere, S2795 contained some very practical and helpful ideas for stabilizing the small group health insurance market. Among its provisions were:
...important underwriting, rating, and access provisions which would provide self-employed individuals with the same protections as small group employers, by making each state's small group underwriting and rating rules the same for the self-employed.
...reducing fears of excessive risk segmentation by forming all interested associations in a state into a single large, statewide association risk pool;
...diversifying the risk pools by encouraging the formation of association groups which would represent a broad base of industries;
...providing a broader range of health plan choices for participating small businesses by pooling risk, enabling participating associations to rely not just on one insurer for coverage of each association's members, but by making all health plans available through the statewide pool available to all the members of all participating associations;
...providing modest tax credits to small companies and self-employed individuals who purchase coverage through the statewide pools, and;
...making the plans available through each statewide association pool subject to each state's existing regulations, while establishing a process for developing a nationwide regulatory framework under which national associations might eventually operate.

Clearly the opponents of S1955, which would have created a national market for small group health coverage through national associations, had a concern that the rapid evolution of a national market dominated by national associations would undercut existing state insurance regulations such as mandated benefits, thus providing national groups with a competitive advantage which statewide or local groups would not have. While arguably the current regulatory environment of 50 separate sets of statewide insurance regulations actually benefits no one but insurers and existing association group plans, S2795 recognized that starting with the aggregation of groups at the statewide level, and migrating over time to a national set of standards, would reduce fights with insurers, state insurance commissioners, and other critical elements of the status quo.

The bill is clearly not perfect, and exactly how some provisions might be made to work is not clear. S1955 was a much more comprehensive (some would say radical) approach to consolidating the market power of small businesses on a nationwide basis. But S2795 was a sensible, thoughtful, and practical approach to beginning the process of small group reform incrementally, and within the existing regulatory structure.

And it had the support of both Democratic and Republican Senators, plus a token Independent. And in the current health insurance reform environment in Washington, how many reform proposals can say that?