Setting the record straight on health law’s delayed small business features

John Arensmeyer

John Arensmeyer

This memo was originally issued on April 4, 2013:

The Department of Health and Human Services’ proposal to delay critical requirements for small business health insurance exchanges in some states is a disappointment to Small Business Majority and millions of small businesses. It’s a letdown to small business owners and their employees looking forward to robust, competitive exchanges in 2014. We hope this proposal is recognized as counterproductive and is abandoned.

That said, there’s a tremendous amount of misinformation circulating about what the rule would actually mean. We want to set the record straight.

What the Rule Would Do

The proposed rule would delay two features of small business exchanges in some states until 2015. It would not delay opening of the exchanges themselves. Exchanges will still open Jan. 1, 2014.

The rule would mean that in some states, two features of the exchange won’t be implemented: 1) employee choice and 2) premium aggregation. These are wonky healthcare terms, but the impact their delay would have is fairly straightforward. Stalling employee choice means small employers will have to wait until 2015 to be able to offer workers an array of health plans to choose from. Delaying premium aggregation means an administrative function that would simplify the payment process for employers also won’t be available for a year. The two features are linked—premium aggregation is not needed without employee choice.

The Facts

Exchanges still open; small businesses still have more than one plan option

What the rule would not do—despite a multitude of reports saying otherwise—is strip small businesses of any coverage choice whatsoever, essentially forcing all small business employers and their workers into one health plan.

Indeed, word on the street is that all small businesses that enroll in exchanges will have access to only one plan. Some reports have even gone as far as saying this plan will be government-run. Neither one of these is true.

Multiple private plans still available

Whether the rule is finalized or not, come 2014, two things will be true: there will be a full array of private health plans offered through the small business exchanges, and employers will be able to choose a plan from them. Their employees can then decide whether to enroll in it. This is essentially how the small group market works right now. What the rule means is that employees themselves will not have a menu of plans to choose from until 2015—which is a new benefit the law provides for small businesses.

Only applies to certain states

It’s also important to note the rule requires only states that have federally facilitated exchanges to delay these features a year. Federally facilitated exchanges are those created by the federal government in states that haven’t chosen to create them on their own. The 17 states implementing their own exchanges can still extend employee choice and premium aggregation to their customers starting in 2014. Nearly 40% of small businesses in this country do business in the 17 states implementing their own exchanges. That means there will be employee choice among health plans for those businesses next year—if their states choose to give it to them.

No impact on self-employed

What’s more, delaying this rule does not impact America’s 22 million self-employed individuals, nearly 30% of whom are uninsured. As planned, these entrepreneurs will still be able to purchase insurance through the individual exchanges in 2014—a huge boon to owners who have struggled to purchase affordable insurance for decades.

The Bottom Line

While certainly disappointing, delaying employee choice and premium aggregation is not the end of the world. Starting next year, small employers will still be able to pool their buying power in the exchanges, giving them the kind of clout large businesses currently enjoy. They’ll still get administrative help and, in many places, will have more choices of plans than they currently do. All the original features of exchanges will go into effect in 2015.

Small Business Majority has been talking to real small businesses across the country since the law was passed three years ago. We know they like the features of the exchange that could be delayed, along with other key provisions including: 1) being able to pool their buying power; 2) the Medical Loss Ratio provision requiring insurers to spend 80% of premium dollars on care; 3) the preexisting condition ban; and 4) the small business healthcare tax credit, which in 2014 will only be available to small business owners who purchase coverage through an exchange. Our national opinion polling further underscores their support for these features.

We hope the proposed rule isn’t finalized, because small businesses nationwide are looking forward to employee choice and premium aggregation. Nevertheless, these features will still be in the exchanges in 2015—albeit a year late.

Plurality of Small Business Owners Want Healthcare Law Upheld; Only One-Third Want it Overturned

John Arensmeyer

John Arensmeyer

Originally released June 14, 2012:

A plurality (50 percent) of small business owners want the healthcare reform law upheld—either as is or with minor changes—while only one-third want the Supreme Court to overturn it, according to opinion polling released today by Small Business Majority. However, after learning more about the law, a clear majority (56 percent) want it kept intact with, at most, only minor changes.

The Supreme Court is expected to hand down its decision any day in the case against the Affordable Care Act, filed by the National Federation of Independent Business (NFIB) and state attorneys general. The polling of 800 small business owners in eight states (Florida, Illinois, Louisiana, Michigan, Missouri, New York, Texas and Virginia) found that once small business owners learn more about the law, their support for keeping it intact—either as is or with minor changes—rises to 56 percent, while opposition falls to just 28 percent.

Contrary to popular belief, small business owners do not want the high court to throw out the Affordable Care Act. They see this law as helping everyone have coverage and bringing down healthcare costs—something that has been one of their top concerns for years. We hope Supreme Court justices understand how important this law is to small businesses who need relief from high healthcare costs.

Key provisions of the law also have strong small business support, including one of the most crucial components for small businesses—the health insurance exchanges. The Affordable Care Act calls for exchanges—online marketplaces where small businesses can pool their buying power when purchasing coverage—to be up and running in every state by 2014. Sixty-six percent of owners say they would use their state exchange or consider using it to provide their employees with health benefits. The majority of entrepreneurs find potential features of the exchange very appealing, including employee choice (76 percent), the exchange educating employees about plans (74 percent), and the exchange providing plans that offer prevention and wellness programs (77 percent). Additionally, a strong majority (66 percent) of small businesses support their state applying for federal funds to set one up.

“Small businesses have been at the center of this lawsuit, and everything I hear is that they want it overturned. That’s not true for me, and it obviously isn’t true for the majority of my fellow entrepreneurs,” said Mark Hodesh, owner of Downtown Home and Garden in Ann Arbor, Mich. “I sincerely hope our Supreme Court justices listen to what real small businesses are saying about this law, not what a select few are saying for us, and that they uphold it. Going back to the status quo would be unthinkable.”

Other key findings from the poll:

  • 55 percent of small businesses who support upholding the law believe it should be kept because we need to make sure everyone has health coverage; more than one-third say it’s because it will make it easier to purchase insurance
  • 72 percent support the medical loss ratio requirement, where insurers are required to spend at least 80 percent of premiums on healthcare claims and quality improvement efforts
  • 65 percent support “rate review,” where state regulators are allowed to review and approve or reject insurers’ increases they deem excessive
  • 78 percent support prohibiting insurers from denying coverage based on preexisting conditions
  • 69 percent support preventing insurance companies from basing insurance rates on health status; 73 percent support preventing insurers from charging women higher rates than men
  • 69 percent favor allowing young people up to age 26 to stay on their parents’ plans
  • 55 percent of small business owners provide insurance to at least some of their employees, but of those who don’t offer it, 70 percent say it’s because they can’t afford it
  • Of small businesses who do offer benefits, respondents said the two most compelling reasons to offer were that they had a responsibility to offer (47 percent) and because it helps retain good employees (47 percent)
  • Of the small businesses who qualify for a tax credit under the law, but were not taking advantage of it, nearly half (46 percent) said they weren’t using it because they were not aware it existed
  • Nearly half of all small businesses (49 percent) said they’d be more likely to offer insurance if they qualified for a tax credit and the same percentage said they’d be more likely to purchase insurance through an exchange if they could receive a tax credit
  • 51 percent of small businesses are interested in establishing a workplace wellness program

To read the full report go online to http://www.smallbusinessmajority.org/small-business-research/healthcare/small-business-owners-views-on-aca.php