Health care reform: how do small businesses survive the changes


Nearly one-quarter of uninsured Americans are employees of firms with less than 25 workers. Small businesses have a tough time affording and choosing health care for their employees because the small pool of workers and rise in administrative costs allows for limited distribution of risk, which means insurers cannot spread the premium cost of health insurance into as many hands as a large organization could.

With these steep costs, small businesses are finding it increasingly difficult to continue providing health care. In 2014, the insurance market will change for small employers in Maryland who offer coverage, according to Mary Ella Payne, vice president for system legislative leadership at Ascension Health, a nonprofit that operates a network of hospitals and health facilities in the United States, including St. Agnes Health Care in Maryland. Payne visited GBC’s Health Care committee April 18 and travels around the country to inform small businesses about how the new health care reform will affect them.

The Affordable Care Act seeks to lower costs and eliminate barriers for small businesses, according to Payne. New offerings will be made available through exchanges, and rating rules and other insurance reforms will make for more stable premium trends. Though Payne did add that firms with younger, healthy employees could see a rise in price as the premium trends level off.

All companies will not be required by law to provide their employees with health insurance, but large employers will be hit with a fine if they choose not to, in order to subsidize what their employees will have to pay at an exchange. Small businesses will be exempt from the fine.

Affordable Insurance Exchanges, a state-based competitive health insurance marketplace where people and small businesses can shop for and buy affordable private health insurance, will be available in 2014. And, in addition, Small Business Health Option Program Exchanges will be in place in 2014 for small businesses. SHOPs simplify choices, but expand employee options. They offer a better means of comparing options to preserve employer control and lower employer costs, said Payne who, before joining Ascension Health, served as a senior advisor on health care issues to West Virginia senator Jay Rockefeller.

In other states, she noted, small businesses have used this opportunity to pool their buying power and economies of scale together with other companies to form associations within their industries where they buy and share insurance as a large company would and allow for more equitable distribution of costs than if each company funneled a plan through their organization alone.

Maryland is not as far along, but has begun enforcing some of the federal minimum standards that will be commonplace beginning in 2014, including providing community-rated premiums. Where an insurer cannot base the premium for a small employer group on health status, occupation, gender or other risk factors, they can vary rates on health status for new enrollees and base the premium for a small employer group on the age of the group’s members and the area in which business is located, Payne said.

Small businesses don’t have to wait until 2014 to start receiving benefits. Payne stressed the small business tax credit availability for low-wage firms offering coverage. She said the credit will help employers buy coverage if they haven’t previously been able to afford and retain coverage if they have it.

The credit is limited to smaller firms with low-wage workers. If a company meets a small list of criteria, they can be eligible to receive up to 35 percent of their premium costs in 2010. The credit will phase out so employers need to take advantage of this now.

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