News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman


For Immediate Release                                                       CONTACT:  Alex Haurek; Duncan Neasham
February 4, 2009                                                                                                         (202) 226-3636

Committee Examines Small Business
Health Care Reform Challenges
Velázquez Introduces “CHOICE Act” to Help Small Businesses Obtain Coverage 

WASHINGTON, D.C. — As health insurance premiums and medical expenditures rise at an alarming rate, employers are struggling to provide health care coverage for their workforce, small business owners told key lawmakers today.  At a hearing before the U.S. House of Representatives Committee on Small Business, witnesses said that small firms are not only struggling to continue providing coverage for their employees, but now find that the cost of coverage is making it even harder to create jobs in an already difficult economic climate.

“For small businesses already under great financial strain, the rising cost of health care simply adds more pressure,” said Rep. Nydia Velázquez (D-N.Y), the Chairwoman of the House Small Business Committee.  “We cannot expect our small businesses to play their traditional role as drivers of the economy and lead our nation’s recovery when crushing healthcare costs prevent them from bringing on new employees.” 

The hearing was the first House of Representatives hearing of the 111th Congress to explore health care reform.   Witnesses discussed a range of reform proposals, including “employer mandates,” which would require employers to provide coverage for their employees.

“The issue of employer mandates must be addressed in a way that will not unduly burden small businesses,” said Velázquez.  “The reality is that reform cannot work if it does not meet the needs of our nation’s entrepreneurs.” 

At the hearing, Velázquez announced that she is reintroducing the CHOICE Act, a bipartisan bill that would allow businesses to obtain coverage at negotiated bulk rates through purchasing pools.  The bill would help small businesses offer health insurance through a refundable tax credit of 65%.  It also minimizes risks for insurance companies by letting small firms pool their employees with those of other businesses in voluntary health cooperatives.  That would allow entrepreneurs to negotiate better rates for coverage for their employees and themselves.  Self-employed individuals would save $5,000 per year on health coverage costs. Other small firms would save more than 34%.  The result would be fewer uninsured Americans and a more competitive business sector.

“Small businesses deserve the same flexibility larger companies enjoy,” said Velázquez. “The CHOICE Act recognizes that solving the health care crisis begins by addressing the health insurance needs of small businesses.”

In general smaller firms contend with higher administrative costs for health care coverage.  With fewer employees over which to spread risk, premiums paid by small employers are also higher than those of large companies.  As a result, only 36 percent of enterprises with 10 employees or fewer sponsor health insurance, while nearly all large employers provide their workers with some form of coverage.   Velázquez said that addressing health care will be necessary for the nation to enjoy a full economic recovery. 

“Reining in healthcare costs is as critical to financial recovery as restoring accountability on Wall Street,” Velázquez added.  “Healthcare reform for small firms is more than a moral obligation, it is an economic imperative.  As the country continues to consider recovery legislation, it is critical that healthcare reform play a role in the process.”

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To view video of the hearing, click here.