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(update) Health Law Hits One Year Mark, Small Businesses Moving Forward

Editor’s Note: Rick Poore may be heading to Washington, DC to testify in front of Congress on behalf of small business owners.  We will let you know ASAP the details, but we wanted to re-publish his blog so you can also see what a great advocate Rick is…

This Wednesday, the new health care law turns one year old. With the three-ringed circus of lawsuits, partisan politicking in Congress, and grandstanding about “nullification” in state legislatures, it’s easy to lose sight of one simple fact: this law is helping small businesses.

Already, news reports are suggesting that more small businesses are signing up for health coverage in Nebraska and across the country. A Feb. 1 article in the Journal Star reported that Blue Cross and Blue Shield of Nebraska saw a 34 percent increase in health insurance sales to small businesses for 2011. In the six months after the Affordable Care Act was signed into law, UnitedHealth Group added 75,000 enrollees in small businesses with less than 50 workers, according to the LA Times. And my insurer, Coventry, a national company that focuses on small businesses, added new business to cover 115,000 more workers in the first nine months of 2010 (also according to the LA Times).

Some of these encouraging numbers are no doubt thanks to the small business tax credits in the Affordable Care Act, which are effective for tax year 2010 and offer thousands of qualifying Nebraska small businesses a credit of as much as 35 percent on their health care costs if they offer coverage and pay at least 50 percent of the premiums.

But a business doesn’t have to qualify for the new tax credit to benefit from the health care law. For small businesses across Nebraska, whether you get the credit or not, there’s a lot to look forward to as more provisions of the law take effect this year and going forward.

These measures include:

  • Stronger rate review: The law gives states new tools and resources to strengthen review of insurance rate increases and protect small businesses from the unreasonable rate hikes we’ve endured so many times in the past.
  • A value for premiums requirement: The new minimum medical loss ratio (MLR) requirement will ensure that small businesses are getting good value for our premium dollars. It requires insurance companies to spend at least 80 percent of premiums collected from small group and individual customers on health costs (as opposed to administrative costs, advertising, lobbying, executive compensation, and profits) or pay a rebate to customers if they fail to meet the requirement.
  • A new competitive marketplace for health insurance: In 2014, new competitive health insurance marketplaces (called insurance exchanges) will give small businesses more transparency, better choices, and more bargaining power when buying insurance.
  • Reduced cost-shifting: As more small businesses (and others) gain health coverage and start paying into the system, small businesses that already provide coverage will see the “hidden tax” we pay now to cover cost-shifting from uncompensated care decrease, lowering overall costs.

Personally, I’m especially looking forward to the new health insurance exchange and the big increase in risk pooling and bargaining power it will mean for my business to be able to band together with other businesses across Nebraska. We’re already getting a small taste of that with our current insurer – they do rating differently, spreading risk across younger and older enrollees – and it’s already helped us control rising costs.

In fact, if I’d kept the same benefit levels when we switched insurers two years ago, we’d be paying about the same amount now as we were paying then – I would have experienced virtually no increase in premiums over the last two years. That’s pretty unheard of. Instead, we took the opportunity to improve our benefits significantly – so we’re paying more, but it’s for more value.

I can’t wait to join a Nebraska health insurance exchange. I can’t wait to get into a combined risk pool and a joint purchasing bloc with thousands of other Nebraska small businesses – then we’ll really have some economies of scale and some serious muscle at the bargaining table.

Now, I know health insurers across the country are pursuing steep rate increases yet again this year. And I know insurance lobbyists are trying to blame these increases on the new law. But quite frankly, that claim is a joke – it doesn’t hold water.

Insurers find an excuse to raise their rates every year. Since I started a group plan for my business in the ’90s, rates have gone up every single year – several times in excess of 30 percent – forcing me to cut back on benefits to keep the premiums within reach.

If insurers are jacking up their rates again this year, it’s in spite of the new health care law, not because of it. If anything, they’re taking the opportunity to whack customers with one more off-the-charts increase while they still can – before the parts of the law that will help rein in these rate increases take effect.

Even executives from the insurance industry itself have admitted the new law is not to blame for their rate increases. A senior vice president at an insurer in Massachusetts told The New York Times recently that only one percentage point of this year’s increases was due to the new law. Myth busted.

Still, despite the fact that small businesses are benefiting from the new law, and despite the fact that we’re eager to move forward, some politicians seem intent on going back. They don’t seem to care that the law is actually helping small businesses. They’re too invested in their partisan battle to roll back the law before more of its benefits kick in. Why the obsession? I’d suggest it has something to do with the fact that the health insurance industry is too invested (in campaign contributions and lobbying dollars) in our politicians.

Let’s be clear: small businesses can’t afford to go back to a health system that stacks the deck against us. We’ve got to keep moving forward on health care. With proper implementation of the health law – that means making decisions in the best interest of small businesses and other consumers, not insurance industry special interests – we can level the playing field and get control of insurance costs. That will allow small businesses to focus on what we do best: things like creating jobs, serving local communities, and building our local economies across the state.

Editor’s Note: This blog post was written by Rick Poore, small business owner of Shirts101.com in Lincoln and leader with Nebraska Main Street Alliance.  All week Bold Nebraska and groups across our state are highlighting the one-year anniversary of the Affordable Care Act.  Each day this week a blog post from small business, medical professionals, young people and more will be posted on our site. If you are a member of the press, please email jane@boldnebraska.org if you would like to interview Rick Poore.  

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