I 

109TH CONGRESS 

2D SESSION H. R. 5288 

To establish a small business health benefits program. 

IN THE HOUSE OF REPRESENTATIVES 

MAY 4, 2006 

Mr. ALLEN (for himself, Mr. CARNAHAN, Mr. DOGGETT, Mr. WAXMAN, Mr. 

BROWN of Ohio, Ms. BALDWIN, Mrs. CAPPS, and Ms. SCHAKOWSKY) introduced the following bill; which was referred to the Committee on Education and the Workforce 

A BILL 

To establish a small business health benefits program. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Small Business Health 

5 Plans Act of 2006’’. 

6 SEC. 2. SMALL BUSINESS HEALTH BENEFITS PROGRAM 

7 (SBHBP). 

8 (a) ESTABLISHMENT.—The Secretary of Health and 

9 Human Services shall establish a small business health 

10 benefits program under which small employers may offer 


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1 health insurance coverage to employees and their depend2 ents. 

3 (b) PROGRAM ELEMENTS.—Under the SBHBP: 

4 (1) ACCESS TO INSURANCE.—Small employers 

5 are provided access, for years beginning on or after 

6 January 1, 2007, to qualified health pooling ar7 rangements under which their employees may elect 

8 self-only or family health insurance coverage under 

9 at least 2 health insurance coverage policies, regard10 less of whether premium assistance referred to in 

11 paragraph (2) is available with respect to such em12 ployer. 

13 (2) PREMIUM ASSISTANCE FOR SMALL EMPLOY14 ERS.—Premium assistance is available under sub15 section (c) to assist small employers in the payment 

16 of premiums for the health insurance coverage pro17 vided. 

18 (3) EMPLOYER SHARE OF PREMIUMS.— 

19 (A) IN GENERAL.—Small employers are 

20 provided access to health insurance coverage, 

21 and may be eligible for premium assistance 

22 under subsection (c), only if they pay (before 

23 the application of any premium assistance 

24 under subsection (c)) at least 50 percent of the 

25 premiums for coverage of their employees, but 


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1 such employers are not required to pay for the 

2 portion of the premiums for dependents of em3 ployees. 

4 (B) CONSTRUCTION.—Nothing in this sec5 tion shall be construed as preventing an em6 ployee from applying the payment described in 

7 subparagraph (A) towards the payment of pre8 miums for family health insurance coverage. 

9 (4) HEALTH INSURANCE COVERAGE.— 

10 (A) IN GENERAL.—Health insurance cov11 erage offered thereunder shall meet the fol12 lowing requirements: 

13 (i) The Secretary determines that the 

14 coverage is substantially similar to health 

15 benefits coverage in any of the four largest 

16 health benefit plans (determined by enroll17 ment) offered under chapter 89 of title 5, 

18 United States Code. 

19 (ii) The coverage complies with State 

20 laws and regulations (including applicable 

21 benefit mandates and other consumer pro22 tections) for group health insurance cov23 erage for the State in which the coverage 

24 is offered. 


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1 (iii) The coverage does not discrimi2 nate, through underwriting, the imposition 

3 of a pre-existing condition exclusion (as de4 fined in section 701(b)(1)(A) of the Em5 ployee Retirement Income Security Act of 

6 1974 or section 9801(b)(1)(A) of the In7 ternal Revenue Code of 1986), differential 

8 benefits, differential premiums, or other9 wise, against an employee or dependent on 

10 the basis of health status. 

11 (iv) The Secretary determines that the 

12 coverage provided to employees is coordi13 nated, in accordance with regulations pre14 scribed by the Secretary, with other cov15 erage provided under governmental health 

16 benefits programs under which health ben17 efits coverage is available to such employ18 ees. 

19 (B) STANDARDS FOR PARTICIPATING

20 HEALTH INSURERS.—In administering the pro21 gram, the Secretary shall promote participation 

22 by health insurers that establish— 

23 (i) integration of health information 

24 technology tools to promote quality; 

25 (ii) chronic disease management; 


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1 (iii) preventive health care services; 

2 and 

3 (iv) evidence-based medicine consider4 ations of prescription drugs and other 

5 treatment that take into account the indi6 vidual medical circumstances of individuals 

7 enrolled in the program. 

8 (5) ENROLLMENT.—In administering the pro9 gram, the Secretary shall provide that employee en10 rollment (and changes in enrollment) are limited to 

11 an annual open enrollment period, except in the case 

12 of qualifying events (such as change in family sta13 tus) specified by the Secretary and consistent with 

14 section 701(f) of the Employee Retirement Income 

15 Security Act of 1974 (29 U.S.C. 1181(f)). 

16 (c) PREMIUM ASSISTANCE.—Under the SBHBP, the 

17 Secretary shall establish a program of premium assistance 

18 for small employers. Such program shall provide for a slid19 ing scale of assistance to such employers taking into ac20 count the following: 

21 (1) The number of employees of the employer. 

22 (2) The average wage level of such employees 

23 relative to the average wage level for employees in 

24 the same geographic area. 

25 (3) The profit margin of the employer. 


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1 (d) REINSURANCE FOR CATASTROPHIC COSTS FOR

2 CERTAIN HEALTH INSURANCE ISSUERS.— 

3 (1) IN GENERAL.—In the case of health insur4 ance coverage offered under the SBHBP by a health 

5 insurance issuer that participates in a qualified 

6 health pooling arrangement, the Secretary shall pro7 vide for reinsurance coverage for 75 percent of cov8 ered claims that exceed, for an individual for a year, 

9 an amount determined by the Secretary for such 

10 year which is not less than the minimum amount 

11 specified in paragraph (2). 

12 (2) MINIMUM AMOUNT.—The minimum amount 

13 specified in this paragraph is— 

14 (A) for the first year in which this section 

15 is in effect, $100,000; or 

16 (B) for a subsequent year is the minimum 

17 amount specified in this paragraph for a pre18 vious year, increased by the Secretary’s esti19 mate of the average annual percentage increase 

20 in health insurance coverage with a median 

21 level of premiums for the previous year. 

22 Any amount determined under subparagraph (B) 

23 which is not a multiple of $1,000 shall be rounded 

24 to the nearest multiple of $1,000. 


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1 (e) QUALIFIED HEALTH POOLING ARRANGEMENT.— 

2 For purposes of this section, the term ‘‘qualified health 

3 pooling arrangement’’ means, with respect to employees 

4 employed in any State for any year— 

5 (1) except as provided in subparagraph (B), an 

6 arrangement established by (and operating under 

7 the oversight of) such State for purposes of this sec8 tion, in accordance with regulations of the Secretary, 

9 which provides for pooling of health insurance cov10 erage offered for such year in such State, and 

11 (2) in any case in which there is not in effect 

12 for any year an arrangement described in subpara13 graph (A) established by such State, the national 

14 health pooling arrangement established under sec15 tion 3. 

16 The Secretary shall determine, within a reasonable time 

17 prior to each year, whether there is a qualified health pool18 ing arrangement described in paragraph (1) with respect 

19 to employees employed in any State. 

20 (f) SMALL EMPLOYER DEFINED.— 

21 (1) IN GENERAL.—For purposes of this Act, ex22 cept as otherwise provided in this subsection, the 

23 term ‘‘small employer’’ means an employer with 50 

24 or fewer employees, as determined under regulations 

25 promulgated by the Secretary. 


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1 (2) CONTINUATION OF PARTICIPATION.—An 

2 employer whose employees are provided health insur3 ance coverage under the SBHBP while the employer 

4 is a small employer as defined in paragraph (1) and 

5 who thereafter has more than 50 employees shall 

6 continue to be treated as a small employer. 

7 (3) EMPLOYERS NOT IN EXISTENCE IN PRE8 CEDING YEAR.—In the case of an employer which 

9 was not in existence for the full year prior to the 

10 date on which the employer applies to participate in 

11 SBHBP, the determination of whether such em12 ployer meets the requirements of paragraph (1) shall 

13 be based on the average number of employees that 

14 it is reasonably expected such employer will employ 

15 on business days in the employer’s first full year. 

16 (4) WAIVER.—The Secretary may waive the 

17 limitations relating to the size of an employer which 

18 may participate under SBHBP on a case by case 

19 basis if the Secretary determines that such employer 

20 makes a compelling case for such a waiver. In mak21 ing determinations under this paragraph, the Sec22 retary shall consider the effects of the employment 

23 of temporary and seasonal workers and other related 

24 factors. 

25 (g) OTHER DEFINITIONS.—For purposes of this Act: 


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1 (1) The terms ‘‘employee’’ and ‘‘dependent’’ 

2 have the meanings given such terms by the Sec3 retary in regulations and shall be based upon the 

4 definitions of such terms used for purposes of the 

5 Federal employee health benefits program estab6 lished under chapter 89 of title 5, United States 

7 Code. 

8 (2) The terms ‘‘health insurance coverage’’ and 

9 ‘‘health insurance issuer’’ have the meanings given 

10 such terms in section 2791(b) of the Public Health 

11 Service Act (42 U.S.C. 300gg–91(b)). 

12 (3) The term ‘‘Secretary’’ means the Secretary 

13 of Health and Human Services. 

14 (4) The term ‘‘SBHBP’’ means the small busi15 ness health benefits program established under this 

16 section. 

17 (5) The term ‘‘State’’ has the meaning given 

18 such term in section 2791(d)(14) of the Public 

19 Health Service Act (42 U.S.C. 300gg–91(d)(14)). 

20 (h) GRANTS FOR ESTABLISHMENT OF STATE QUALI21 FIED HEALTH POOLING ARRANGEMENTS.— 

22 (1) IN GENERAL.—The Secretary shall provide 

23 grants to States for the establishment and initial ad24 ministration of qualified health pooling arrange25 ments described in subsection (e)(1). 


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1 (2) AUTHORIZATION OF APPROPRIATIONS.— 

2 There are authorized to be appropriated such sums 

3 as may be necessary to carry out this subsection. 

4 SEC. 3. ESTABLISHMENT OF NATIONAL HEALTH POOLING 

5 ARRANGEMENT. 

6 (a) IN GENERAL.—The Secretary of Health and 

7 Human Services and the Secretary of Labor, acting jointly 

8 and in consultation with the Director of the Office of Per9 sonnel Management, shall provide for— 

10 (1) the offering on a timely basis consistent 

11 with section 2 of a national health pooling arrange12 ment to eligible small employers; and 

13 (2) appropriate oversight over any such ar14 rangement. 

15 (b) SPECIFIC REQUIREMENTS.—In carrying out sub16 section (a), the Secretaries shall— 

17 (1) model the national health pooling arrange18 ment on the Federal employees health benefits pro19 gram under chapter 89 of title 5, United States 

20 Code, to the extent practicable and consistent with 

21 the other requirements of this Act; and 

22 (2) consistent with paragraph (1), negotiate the 

23 most affordable and substantial coverage possible for 

24 small employers. 

25 (c) DEFINITIONS.—For purposes of this section— 


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1 (1) the term ‘‘Secretaries’’ means the Secretary 

2 of Health and Human Services and the Secretary of 

3 Labor; and 

4 (2) the term ‘‘national health pooling arrange5 ment’’ means an arrangement which provides for 

6 pooling of health insurance coverage offered for any 

7 year in all States which do not have in effect for 

8 such year an arrangement for pooling of health in9 surance coverage offered in such States. 

Æ 


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