By Cromwell Schubarth

There are an estimated 400,000 people in Massachusetts without health insurance.

More than half of them either work for small businesses or are self-employed, says Bill Vernon, state director for the National Federation of Independent Business.

And judging by premium notices small business owners are getting in the mail this month, that situation could get worse.

"It's all about cost," Vernon says. "Many owners say their insurance cost is jumping between 25 and 40 percent."

Skyrocketing premiums are providing momentum in Washington for bills that would let small firms band together across state lines to buy cheaper insurance.

Allowing so-called "association health plans" could bring savings of about 13 percent for small firms' insurance, according to the Congressional Budget Office.

Sen. Olympia Snow (R-Maine), the head of the Senate Small Business Committee, is introducing a bill to allow such plans - supported by President Bush - in the Senate today.

"The skyrocketing costs of health insurance are simply crushing small businesses," Snow says. "Association health plans will provide a starting point in solving the health care crisis facing our nation's employed but uninsured."

But Massachusetts Sen. John Kerry, the ranking Democrat on the panel, says that much of the savings in association health plans comes because they are exempt from state rules.

The plans can exclude people from coverage that Massachusetts wouldn't let insurers reject, if state rules applied, he said through a spokeswoman. And he adds that they "do away with important patient protections that federal rules don't require."

"These are protections that the Bush Administration is forfeiting for a bargain basement solution for small businesses desiring affordable health care," Kerry warns.

Massachusetts' existing insurers share that concern, says Dr. Marylou Buyse, president of the state trade group that represents insurers.

"We support the goal of the legislation but we don't think this is the right approach," she says. "People in Massachusetts are used to guaranteed coverage protections, an extensive appeals process and safeguards against plans going out of business. They won't get that with association health plans."

U.S. Labor Secretary Elaine L. Chao says her agency is ready to oversee association health plans, as the legislation calls for.

Labor department officials admit that some Bay State insurance rules would be circumvented. They say, however, that this levels the playing field, as big, self-insured corporations are already exempt from the rules.

Legislation calling for association health plans has come up every year for some time, but has died annually with little debate.

Judging from the level of criticism and volume of debate it's generating already, this could be its year.