The Tennessee Senate has given final approval to legislation, sponsored by state Sen. Steve Southerland, R-1st, of Morristown, to let more small-business owners join together to negotiate lower health insurance rates.

The bill, SB 4014, is designed to encourage more small employers to purchase health insurance, and give them predictability and stability in health-insurance rates, according to a news release from the senator.

The companion bill, HB 4066, has been referred to the House Government Operations Committee.

"Affordable health insurance has been a top concern for many small businesses," said Sen. Southerland, who is chairman of the Senate Commerce Committee.

"The lack of affordable health insurance hurts small-business owners, their families, and their employees," Southerland stated. "This, in turn, also raises the cost to taxpayers because many individuals who lack health insurance visit an emergency room for treatment, which is more expensive than a physician visit."

The legislation would provide more flexibility for those small business owners who may choose to form pools. The bill raises the maximum threshold for small businesses eligible to participate to 50 eligible employees, with a two-employee minimum.

The bill also would define a health group cooperative as a private purchasing cooperative that contains at least 1,000 employees, or that has a minimum of 10 participating employers.

Membership would be voluntary, but participants must commit to purchasing coverage of fully funded plans through the cooperative for five years to ensure pool stability.

A cooperative must operate as a nonprofit corporation and must register and demonstrate compliance with the Department of Commerce and Insurance, under the bill.

"It is very important that we do everything we can in Tennessee to help our small businesses and their owners," Southerland added. "By forming health group cooperatives, small businesses can spread their risk over a broader group to enhance their ability to get lower rates on insurance."

A study conducted by the National Federation of Independent Business (NFIB) 15 years ago showed 75 percent of its members offered health insurance. Results of the same poll last year showed a drop to only 45 percent of members offering coverage, with businesses with the smaller number of employees being less likely to offer insurance.

While CoverTN, the state-sponsored health insurance for small businesses, has also eased the size limitations for eligible companies from 25 employees to 50, some experts do not believe that the program's role will greatly increase, Southerland said. Most of the 13,000 currently enrolled in CoverTN are sole proprietors, he said.

Speaking of the proposed legislation that still must pass the House to be enacted, Southerland said, "This bill helps us overcome some of the barriers to health care insurance for small business owners. I am pleased our Senate has approved this legislation."