By ADAM SICHKO
The Business Review

Republicans who control the state Senate will propose a new public authority this week to supply health insurance to businesses.

The insurance exchange, run by the state, would aim to lower heath-care costs by sparking competition among insurers and allowing firms to team up for greater bargaining power, ideally driving down premiums.

Exchanges are a prominent part of the federal health care overhaul approved last year.

Exchanges must be up and running by the start of 2014 - but state legislators must take action by late June to help secure millions in federal funding to set up the program.

Sen. James Seward, chairman of the Senate insurance committee, said Tuesday he hopes the pending Senate plan will spark negotiations with Democrats who control the Assembly, as well as Gov. Andrew Cuomo's administration.

Seward wants the Legislature to approve the setup by June 20, the scheduled end of this year's session.

Some business groups had pushed for a new not-for-profit to run the exchange, as opposed to state government, which will also regulate the exchange.

Most stakeholders expressed a desire for a public authority, even though they are exempt from some oversight that state agencies are not.

"This will at least get the basic structure in place," said Seward, whose district includes Greene and Schoharie counties. "It would be more nimble than a state agency but more accountable than housing it in a separate not-for-profit."

The Senate bill will give the new authority approval to start hiring and begin the procurement process, Seward said. He declined to reveal more details until he introduces the bill, which he said he will do by Friday.

A range of critical questions remain unanswered. Among them: whether businesses will be put in a separate exchange (as lobbies have advocated), or be combined in one pool with individual consumers.

Another question is whether to define "small business" as having a maximum of 50 workers, or 100 workers.

The solutions for either would have a direct impact on premiums offered through the exchange.

Seward said the governing board of the new public authority, as well as other advisory boards, will make recommendations in those areas.

"We're taking a bare-bones approach for 2011. I anticipate those public-policy questions will be 2012 issues," Seward said. "They do not need to be addressed right away."