New bill encourages health insurance co-ops for small businesses

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A new bill introduced in Congress this week would help small businesses, including independent nursing homes and other healthcare providers, form health insurance cooperatives to provide their employees with affordable health insurance.

The Small Business Cooperative for Healthcare Options to Improve Coverage for Employees Act of 2008 would provide small companies with a refundable tax credit for up to 65% of the cost of individual health insurance and 35% of the cost of family insurance. This plan combines elements of plans for small business healthcare introduced by Democratic presidential candidate Sen. Barack Obama (IL) and Republican presumptive nominee Sen. John McCain (AZ), according to House Small Business Committee spokesperson Jaime Zapata.

Health insurance cooperatives, while effective in some cases, face many challenges, including health provider hostility and state regulations, according to an analysis of the situation in The Washington Times. Proponents of the bill say that cooperatives will work well within existing state laws.