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More Power to Provide Health Care for Uninsured Employees, and Better Health Care Options for Employees

Small businesses frequently have trouble providing health care and pensions to their employees. The President applauds the Congress for already taking significant action to improve the retirement security for workers at small businesses. For example, the 2001 tax law provided a tax credit to help small businesses pay for the first three years of administrative expenses of a new pension plan. The President believes that we must work equally hard to increase health security for the employees of small businesses. Specifically, he proposes the following steps:

  • Permit associations to provide health insurance. Under this proposal, industry associations such as the National Federation of Independent Businesses could effectively pool together their members to offer health insurance policies, called Association Health Plans. This change would give small businesses the same kind of purchasing power and coverage options that large firms can provide for their employees. By establishing nationwide standards for association health plans, small businesses will have access to lower cost plans, greater administrative efficiencies, and much greater flexibility in the design and choice of benefits.
  • Dramatically improve Medical Savings Accounts. Medical Savings Accounts (Archer MSAs) combine a tax-free saving account with a high-deductible health insurance plan, providing a lower-cost health care option that is ideal for small businesses. Unfortunately, the excessive restrictions on MSAs have prevented small businesses from taking full advantage of their potential. This proposal would eliminate the current cap on the number of MSAs allowed nationwide and would lower the required deductible from $1,650 to $1,000 for an individual plan and from $3,300 to $2,000 for a family plan. This proposal would also allow MSAs to include first-dollar coverage for preventive care and would allow MSAs to be used with insurance plans commonly available in the market today. These changes will make MSAs significantly more attractive to both employers and employees. This proposal costs $6 billion over 10 years.