WASHINGTON – Small businesses are the intended beneficiaries of health insurance legislation introduced on Wednesday by Sen. Olympia Snowe, R-Maine, senior Republican member of the Small Business and Entrepreneurship Committee.

“I can’t tell you how many people who run small businesses in the state have told me how much they want to offer health benefits to their employees and they can’t,” Snowe said in an interview on Wednesday. “This legislation is going to have a huge effect in Maine because Maine is a small-business state. That’s what inspired me. I heard from small-business owners directly.”

The Small Business Health Options Program, or SHOP, would make health insurance more affordable for small businesses through a tax credit to offset part of employers’ contributions to employee premiums.

The legislation also would encourage small businesses to become part of regional purchasing pools and, beginning in 2011, of national pools to lessen administrative costs.

Additionally, a lack of competition in the insurance industry has resulted in small businesses being “trapped,” Snowe said.

In Maine, four insurers control 98 percent of the market, Snowe said. “If you have no competition, you have a rise in prices, a rise in prices means no health insurance, and that’s simply unacceptable and unconscionable.”

The purchasing pools are intended to give small businesses more health plan options, pushing competition in the health insurance industry and encouraging lower rates.

There are 124,000 uninsured people in Maine and more than 13 million people working for small businesses that are uninsured in the nation, said an October 2007 report by the Employee Benefit Research Institute, which researches economic security and employee benefits.

Most of these people are uninsured because of the cost, Snowe said, adding that the increasing cost of health insurance has been the No. 1 concern for small businesses.

Individual coverage in Maine costs about $4,800 a year, a figure that Snowe called “atrocious.” Meanwhile, insurance premiums have increased by 78 percent since 2000, Snowe said.

The legislation is designed to help the more than 41 million employees of the nation’s almost 6 million small businesses. Small businesses provide about two-thirds of the new jobs in America. In Maine, about 90 percent of businesses are small.

Snowe’s bill has received support from the National Federation of Independent Business, the Service Employees International Union and the National Association of Realtors, as well as Maine’s Bureau of Insurance.

“The SHOP Act recognizes the important protections that many states, like Maine, already have and sets a federal standard,” Mila Kofman, superintendent of Maine’s Bureau of Insurance, said in a letter sent to Snowe on Wednesday. “The SHOP Act is an important step forward. I applaud your efforts and commitment to Maine’s and America’s small businesses and workers.”

In the past, similar legislation was rejected under heavy pressure from the insurance industry, Snowe said. Now, she said, the industry supports her bill.

Snowe recounted in an interview a time before the 2006 election when she went into a shoe store and the man behind the counter dropped on the counter his Blue Cross and Blue Shield bill.

“It was staggering,” Snowe said. “I couldn’t help but think, here he is, struggling to keep his business together, a family-owned business, and there’s no justification for the inability of Congress to just let this happen.”

Snowe said that she can’t see “any good reason why this can’t be supported” because of a general sense in the Senate that it needs to get done. She said she believes the legislation will pass before the November elections.