Controversial Health Care Bill Dies in Senate

Senate Democrats on Thursday blocked hotly contested legislation that promised small businesses a way of purchasing low-cost health insurance directly from industry groups or trade associations.

Click here to visit FOXBusiness.com's NEW Small Business page.

The Health Insurance Marketplace Modernization Act, which would have allowed small businesses to participate in association health plans, was defeated 55-43, short of the 60 votes needed to push the bill through. The vote came down largely along party lines — two Democrats, Louisiana’s Mary Landrieu and Nebraska’s Ben Nelson, voted for the bill and one Republican, Rhode Island’s Lincoln Chafee, voted against it.

“After a decade of gridlock and no real chance to pass genuine health insurance reform through the Senate, this bill is the only light at the end of the tunnel for small business and working families,” Sen. Mike Enzi, R-Wyo., the bill’s sponsor, said in a statement.

The legislation’s defeat marked an anticlimactic close to the Senate’s “Health Week,” in which the chamber failed to pass any bills. The Senate on Monday voted against caps on jury awards in medical malpractice cases.

Hailed as “the first bipartisan health insurance reform bill in a decade” by Enzi, the bill was touted by supporters as a way of saving small-business owners from financial burdens imposed by what are seen as costly and disparate state insurance regulations.

Insurance regulations, however, proved to be crucial in the bill’s undoing. As drafted, the bill would have mandated that AHPs offer the same benefits that were provided to state employees in the five most populous states (California, Texas, New York, Florida or Illinois), but would have preempted more stringent state laws.

Arguing that the bill would render meaningless various state regulations mandating coverage for everything from cancer screening to contraception, health advocacy groups including the American Cancer Society and the American Diabetes Association, along with 39 state attorneys general, strongly opposed the bill.

"No one should be fooled by this wolf in sheep's clothing; striking down decades of consumer advocacy protections at the state level will prove to be a boon for the insurance industry, not small businesses and not the American people,” Sen. John Kerry, D-Mass., said in a statement last week.

Still, other AHP bills may soon be proposed. “We’ve achieved more with this bill in the Senate than any other small-business health bill in more than a dozen years,” Enzi said. “The voice of people without insurance keeps getting louder. My colleagues will have to listen. We’re going to keep up the effort to move this small business health plans forward.”

Click here to visit FOXBusiness.com's NEW Small Business page.