Washington- Congressman Joe Pitts (PA-16) today joined Small Business Committee Chairwoman Nydia Velazquez (D-NY) in introducing new healthcare legislation meant to help American entrepreneurs bridge the expanding healthcare gap.  The legislation will be known as the Small Business Cooperative for Healthcare Options to Improve Coverage for Employees (CHOICE) Act of 2008.  It allows small businesses to form health insurance cooperatives and to then transfer the risk of catastrophic medical costs to a captive excess claims insurer.  The bill also creates important incentives for small businesses to provide the families of their workers with expanded coverage

Congressman Pitts’ statement follows:

“Small businesses are the backbone of innovation and job creation in our economy.  This bill will address two problems at once; helping small businesses to remain competitive in the economy while getting more people covered with health insurance.”

Background

The purpose of the Small Business CHOICE Act is to eliminate premium volatility and reduce premium costs by encouraging small businesses to transfer the risk of high medical costs to a captive excess claims insurer formed by a small business cooperative.  The Small Business CHOICE Act allows small businesses to pull together to reduce the cost of health insurance coverage.  However, unlike traditional pooling mechanism, which leverage purchasing power to negotiate lower health insurance costs, the Small Business CHOICE Act uses pooling to spread the risk of high cost claims.  Spreading risk gives small businesses greater premium predictability; increases health care options in the insurance market; and curtails the negative impact high cost medical claims can have on premium pricing.  

The bill also offers a key incentive in the form of a refundable tax credit to small businesses that choose to join a cooperative.  The credit would be available to small businesses with no more than 100 employees.  And employers would be required to offer a small business wellness program to receive the credit.

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