As the engine of our nation’s economic growth, small businesses create about 75 percent of new jobs in America. In Maine alone, 97 percent of all businesses are small - employing under 20 people. But in just two years, small business owners who provide employee health insurance have watched premiums rise by an average of 28 percent - forcing them to make a Hobson’s choice between providing health insurance and just staying afloat.

Business owners have told me that the high cost of health insurance keeps them from expanding their business and hiring new employees. With the availability of health insurance often playing a deciding role for workers choosing a place of employment. That puts small businesses that cannot afford to offer health coverage at a disadvantage. And for those who do provide insurance to their employees, the high cost can actually discourage the creation of new jobs, because bringing on new workers can mean taking on potentially crippling health insurance expenses.

There is a solution, as the President indicated, to give small businesses the relief they so desperately need - through Association Health Plans (AHPs). The AHP model works by allowing small businesses to pool their employees, through their membership in legitimate trade associations, such as Chambers of Commerce, to purchase group health insurance plans. These associations can leverage their size just as large businesses and unions do to negotiate lower insurance costs and increased options.

The main impact on workers would be immediately evident – AHPs provide workers and their families with insurance they could not afford otherwise. A second benefit is less obvious, but just as critical: small business owners, armed with the purchasing clout AHPs provide, can turn their resources to growth and expansion.

Last March, I introduced “The Small Business Health Fairness Act of 2003"(S.545), that would create national AHPs and improve access to affordable health care for small businesses by giving them the same advantages currently enjoyed by large employers and unions. It allows associations to pool their employees to purchase their insurance from a provider, or self-insure in the same way that many large employers and unions do, designing health insurance plans that best meet the needs of their members.

These AHPs would be regulated by the Department of Labor (DOL), in the same way that over 275,000 plans currently offered by large employers and unions are. Today, the DOL effectively oversees health plans that provide critical benefits for 72 million people.

Opponents of AHPs claim that these plans would encourage “cherry picking,” by allowing group plans to select only healthy employees for insurance and rejecting individuals with a history of illness or pre-existing conditions. But my legislation prevents this, by requiring AHPs to provide all interested employees (regardless of age, health status, etc.) with information regarding coverage options available to them under a plan.

What’s more, under the “Health Insurance Portability and Accountability Act of 1996" (HIPAA) an individual or employer cannot deny coverage based on health status or claims experience. AHPs would be subject to the portability, nondiscrimination, special enrollment, renewability and preexisting condition provisions under HIPAA.

My bill goes further by providing extensive new protections to ensure that health care coverage is available when employees need it. It includes provisions to prevent fraud perpetrated by sham associations that take money from small businesses and then vanish when an employee files a claim. Self-funded AHPs would be required to have sufficient reserve funds and meet other funding and certification standards – stronger requirements than are currently mandated for self-funded union and large employer plans.

Lastly and significantly, at a time when we are all concerned by record-breaking deficits, AHPs help millions of Americans lacking insurance by leveraging the inherent strength of the marketplace without committing the federal government to expensive new outlays.

AHPs are synonymous with good business, good sense, and good policy. They are the best way to give small businesses more affordable health insurance choices – and the opportunities they need to create new jobs.