How small business fares under health-reform bill

By Kent Hoover, Washington Bureau Chief,
Denver Business Journal

Many small business groups oppose the massive health care reform bill that passed the U.S. House of Representatives late Saturday, contending it would raise insurance premiums for many firms and create disincentives for hiring new workers.

Some small business owners, however, support the legislation. They think the insurance market needs the bill’s reforms, such as barring insurance companies from denying coverage based on pre-existing conditions. Plus, they think providing a government-run option in new health insurance exchanges would bring needed competition to the insurance market.

The 220-215 vote on the House bill is the first step in the end game for health care reform. The Senate still must vote on its own version, and then the two bills must be merged for a final vote by each chamber. The legislation would then go to President Barack Obama for his signature.

This process could take weeks, if not months, to play out, but the House bill provides a starting point for small businesses to determine whether they would be helped or hurt by the legislation.

Here’s a look at some of the provisions that would have the most impact on small businesses:

Health insurance exchanges
The House bill would create a national insurance exchange where small businesses and individuals without coverage could shop for coverage. States could opt to offer their own exchanges or create regional exchanges.

These exchanges would become operational in 2013. In the first year, businesses with up to 25 employees could purchase insurance through the exchanges. That would increase to 50 employees in 2014 and 100 employees in 2015.

A government-run plan would be offered as an option in the exchange. This plan would negotiate the rates it pays to hospitals and other health care providers, instead of paying Medicare rates, which are lower than the rates that private insurers pay providers. The public plan’s costs would be covered by the premiums it charges.

By 2019, 30 million Americans would be covered through the exchanges, 6 million of them opting for the public plan, according to Congressional Budget Office estimates.

The exchange will “promote transparency and new choices,” said Kelly Conklin, who owns Foley-Waite Associates, an architectural woodworking company in Bloomfield, N.J. “It provides a competitive public health insurance plan that will give small businesses new leverage, drive down costs and inject new competition into the marketplace.”

Conklin serves on the national executive board of Main Street Alliance, a coalition of small business owners that supports the House bill.

In recent days, several Colorado small-business owners traveled to Washington to voice support for congressional health care reform efforts, including the public option.

The business participants were part of a pro-reform coalition assembled by advocacy groups, including Main Street Alliance, and labor unions.

The National Federation of Independent Business, which opposes the bill, supports allowing small businesses to pool their purchasing power for health insurance. It sees several major problems with the exchanges in the House bill, however.

Health plans that would be offered through the exchange would have to offer a minimum level of insurance benefits -- including behavioral health treatments and durable medical equipment -- that exceeds what’s now covered in many small business policies, said Michelle Dimarob, a House health care lobbyist for NFIB.

“It’s going to be more expensive that what small businesses typically are buying today,” Dimarob said.

All employers, even those not using the exchanges, would have to meet these minimum insurance standards by 2018.

Business groups also fear the public plan would undermine private insurance.

A letter to House leaders signed by 10 other business groups that oppose the House bill, including the U.S. Chamber of Commerce, said the public plan “will not operate on a level playing field and compete fairly if the government acts as both a payer and a regulator.”

Even if the public plan initially pays negotiated rates to health care providers, “soon there would be tremendous pressure for the new public plan to pay below-market rates, just as we have seen in Medicare and Medicaid,” the letter states. This would shift costs to private insurers and employees who are covered by private plans, it said.