Small business health insurance plans are almost prohibitively expensive to provide under the current system. Making small business medical insurance more affordable was one of the main goals of the health care reform bill passed by the Congress of the United States of America and signed into law by President Barack Obama in March 2010.
The first way that the health care reform bill sought to make small business medical insurance more available was to facilitate the ability of small businesses to collaborate in order to barter for better rates from insurance companies. The theory is that the small business health insurance plans that these small business will be able to form if they collaborate will result in better rates than if each small business attempted to arrange their own independent health insurance plans with the companies.
The logic is that since the Federal Government, which through Medicare and Medicaid is the largest provider of medical care, is able to obtain better prices by virtue of its large size, and thus, increased bargaining power, then the small business health insurance plans that these conglomerations of small businesses will negotiate will be better than independent small business health insurance plans.
This plan should also make it easier for the health insurance companies since small businesses comprise more than one third of the economy of the United States of America. Having fewer groups to negotiate with may help the companies that provide the small business medical insurance to save on their overhead costs by reducing the number of negotiators they will need.