Virginia Gov. Tim Kaine signed legislation Tuesday that would allow small businesses to team up to buy health insurance.
The law would allow any of Virginia’s 179,000 business with 50 employees or less to pool in with other businesses to initially purchase or improve their existing health coverage. The new bill would effect the health care of nearly 1.4 million employees.
Calling small and midsized businesses “a cornerstone to Virginia’s economic success,” Kaine said. “This bill allows creative options to help small businesses confront this problem effectively.”
The double-digit premium increases have become a “predominant concern” for small businesses, said Tony Howard, a Fairfax County Chamber of Commerce spokesman.
“If you are a small business, you are like an individual — you don’t have the numbers for the insurance company to cut a deal on rates. This cooperative allows you to have a little more bargaining room as a group of businesses together. The same way a corporation would,” said Louisa Strayhorn, Virginia Department of Business Assistance director.
“It is something [that] as a chamber with seven employees we grapple with each year,” said Laurie Wieder, president of the Prince William County Regional Chamber of Commerce. “It is difficult to obtain insurance if you have one unhealthy person in the group. You don’t make hiring decisions on health.”
The state legislation allows flexibility in establishing the pooled groups, collecting premiums or by allowing each company to handle its own policy, loosening existing legislation.
The main reason pools don’t work is that sometimes healthier “people think they can get a better deal so they pull out and it disrupts the whole pool. Like-minded companies should pool together to get better rates,” said Anna Healy, policy director at Virginia Association of Health Plans.
Hugh Keogh, president of the Virginia Chamber, called the measure “helpful, but it is not a panacea.”
He added, “There is also an irritating tax on the self-employed on their health care insurance premiums. It is a huge boon to small-business development and entrepreneurship to get that tax removed.”
Va. Small Businesses
» 275,000 businesses with 250 employees or less
» 179,000 businesses with 50 employees or less
» 1,391,000 employees work in companies with 50 employees or less
