What Would Health Care Reform Mean for Small Businesses and Their Workers?

What Would Health Care Reform Mean for Small Businesses and their Workers?

The Affordable Care Act Increases Choice and Saving Money for Small Businesses. Small businesses are the backbone of our economy, but high health care costs and declining coverage have hindered small business owners and their employees. (Health Reform for Small Businesses/WhiteHouse.Gov)

Part I Introduction

The creation of the Affordable Care Act has brought many persons into a disagreement and has been in argument thru many administrations. Therefore we as a people should come together and set forth a plan that will be a benefit to All Americans. If we are to fix the economy of America we must repair the healthcare system. By reforming our healthcare system it will allow for you to maintain the coverage you have or seek another, delivering quality of care at a decreasing cost and waste elimination, allowing small businesses to remain competitive and reforming insurance coverage so there would never be a threat of losing coverage.

"The Affordable Care Act requires states to create health insurance exchanges, or marketplaces, where small businesses can review, compare, and purchase health insurance. The small business exchanges, which will be created under the law of the Small Business Health Options Program (SHOP), will offer group health plans to small businesses. The exchanges are to offer a variety of health plans;

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Provide comparative benefits information, costs and quality; and facilitate enrollment in a plan of choice". (Health Policy Brief February 9, 2012)

The costs of insurance administration in the U.S. health care system totaled nearly $160 billion in 2008, and that figure is expected to double to $320 billion by 2018. The administrative cost component of private insurance premiums runs from 5 percent to 40 percent, depending on the market and state in which the insurance policy is purchase.

My focus is upon the small businesses and the affect that the Affordable Care Act will have upon these businesses and their employees. It has been noted that small employers are at a significant disadvantage as purchasers of health insurance relative to large employers. Small businesses have faced multiple barriers to offering affordable health insurance coverage to their employees. High administrative costs and a limited ability to spread risk contribute to high premiums for small firms. The low wages of many small-firm workers and the costs associated with shopping for a health plan present further challenges for small firms wishing to offer coverage. Small employers are much less likely to offer health insurance coverage to their workers, and workers in small firms are more likely to be uninsured. The barriers that small employers face in insurance purchasing come on multiple fronts and as premiums continue to grow faster than wages.

The Individual Insurance Market Is Not an Affordable Option for Small-Firm Workers

Working adults ages 19-64 in firms with <50 employees:

Has individual coverage or tried to buy it in past three years 38%

Among those:

Found it very difficult or impossible to find coverage they needed 44

Found it very difficult or impossible to find affordable coverage 57

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Were turned down, charged a higher price, or had a specific health problem excluded from coverage 33

Any of the above 69

Never bought a plan* 69

Several components of the ACA are likely to affect the health insurance options and decisions of small firms. The introduction of health insurance exchanges and reforms to health insurance markets are expected to benefit small firms seeking coverage for their employees. Tax credits to assist in purchasing coverage will be available to the smallest low-wage employers, while larger employers will face new requirements to contribute to the cost of their employees' health insurance coverage. Expanded options outside of employer-sponsored coverage, including a Medicaid expansion, a reformed individual health insurance market and premium subsidies for low-income individuals, are also expected to benefit small-firm employees and their families.

Findings show only 35.6 percent of employers with fewer than 10 workers offered insurance to their workers, compared with 98.9 percent of employers with 1,000 or more workers. Employers with fewer than 10 workers were 10.1 percent less likely to offer coverage in 2008 compared to 2000, and those with 10 to 99 workers were roughly 4 percent less likely to offer coverage, according to the Urban Institute (Robert Wood Johnson Foundation).

Affordable Care Act would enact reforms that would change the health care options and affordability of coverage available to small employers and their workers.

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Part II Goals

There are several goals that could be met as part of the ACA and its effect on small businesses. One is the guaranteed protection of controlling the costs and competition. Another would be to allow small businesses to receive tax credits.

Under the ACA the would be the development of a health insurance exchange which would provide small businesses and people without access the opportunity to obtain coverage thru

Medicaid or a choice of private or public health plans. There would be offered a standard benefit package or packages thru the exchange with minimum offerings and the prevention of underwriting through on the basis of one's health. The options for these plans have set standards that must be met offering lower cost because of the lower overhead of administration cost and the rates of the premiums.

The other would be the Tax Credits that the businesses would receive to offset the cost of the Premiums. Under this option the employer would receive a credit for up to three years for any firm that had fifty(50) workers or less and with an average salary of $50,000 or less if coverage is offered and sixty(60) percent or more of the premium is paid. The tax credit is phased out for employers with ten (10) to twenty-five (25) employees and for employers with $20,000 to $40,000 a year wages.

With the small businesses ability to buy coverage through the exchange and the employer meeting the standard of benefits offered thru the exchange would improve the benefits of