State Senator Raoul’s proposal allows small businesses to form purchasing groups, save money on benefits

SPRINGFIELD, IL – Illinois State Senator Kwame Raoul (D-13th)’s proposal to allow more businesses to form health care purchasing groups has passed the Senate. Because groups of businesses can negotiate lower rates than individual businesses, the legislation will result in lower costs for employers and a greater incentive to insure employees.

“Purchasing groups have a history of providing superior care at competitive prices in Illinois and other states,” Sen. Raoul said. “I want to expand this option at a time when we desperately need to make our state more business-friendly while also making it a great place to work.”

Senate Bill 2885 allows businesses with up to 2,500 employees to join health care purchasing groups. Previously, Illinois law had restricted membership in such groups to businesses with 500 or fewer workers. Businesses in a health care purchasing group pool their collective size to negotiate better prices for health insurance by reducing risk for the insurer, so opening the door to larger businesses could drive prices even lower.

Federal health care reform legislation has also authorized $6 billion in federal loans to assist in the creation of health insurance cooperatives, which allow businesses to band together and contract directly with health care providers.  These two options – health care co-ops and purchasing groups – will help more businesses insure their workers, leading to better health outcomes and fewer working people forced to purchase costly individual insurance, apply for medical assistance, or go without coverage.

“Purchasing groups and co-ops are critical to reaching the goal of health care access for all Illinoisans,” said Sen. Raoul. “Working with all stake-holders to craft viable legislation has not been easy, but giving small businesses and workers these new options will be well worth the effort.”

Small businesses that offer group health insurance pay an average of 18 percent more in premiums and 25 percent more in administrative costs than larger companies.

“This legislation helps level the playing field so that small and medium-sized businesses can compete and grow,” Sen. Raoul said.