State Sen. Jim Tracy

The Tennessee State Senate has given final approval to legislation to let more small business owners join together to negotiate lower health insurance rates. Sen. Jim Tracy (R-Shelbyville) is one of the sponsors of the bill, SB 4014, which is designed to encourage more small employers to purchase health insurance, and give them predictability and stability in health-insurance rates.

"Small businesses need greater access to affordable health care insurance," said Tracy, who is himself an insurance agent, in a news release. "It is very important for the many Tennessee employees and families that are employed by these businesses."

The bill provides more flexibility for those small business owners who may choose to form these pools by raising the threshold for small businesses eligible to participate from 25 to 50 eligible employees, with a two-employee minimum. It would define a health group cooperative as a private purchasing cooperative that contains at least 1,000 employees or that has a minimum of 10 participating employers. Membership would be voluntary, but participants must commit to purchasing coverage of fully funded plans through the cooperative for five years to ensure pool stability. A cooperative must operate as a nonprofit and must register and demonstrate compliance with the Department of Commerce and Insurance, under the bill.

"Health care cooperatives are a new opportunity for small businesses to find quality, affordable health insurance," Tracy added. "Cooperatives offer employers the opportunity to join a large group and gain the power of group purchasing. This bill will encourage more participation and enhance the number of Tennessee employees who are covered by health insurance."

A study conducted by the National Federation of Independent Business (NFIB) 15 years ago showed 75 percent of its members offered health insurance. Results of the same poll last year showed a drop to only 45 percent of members offering coverage, with businesses with the smaller number of employees being less likely to offer insurance.

While CoverTN, the state-sponsored health insurance for small businesses, just eased the size limitations for eligible companies from 25 employees to 50, some experts do not believe that the program's role will greatly increase. Most of the 13,000 currently enrolled in CoverTN are sole proprietors.

The bill is one of two bills pushed by NFIB to encourage more small businesses to purchase health insurance for employees. The other bill, SB 2659, would give small businesses a tax credit for continuing to offer insurance. That bill, sponsored by Senator Diane Black (R-Gallatin), will be heard in the Senate Finance Tax Subcommittee next week.