Health Care Act Upheld Benefits Problems

Insurance exchanges could enable smaller employers to shop for a wider range of coverage choices — or help them bargain for better prices from their existing insurers.

CFO magazine
David Rosenbaum




Barack Obama signing the Patient Protection and Affordable Care Act at the White House (Photo credit: Wikipedia)

“It’s moot,” says Pingup CFO Bethe Palmer when asked about the impact on her small technology start-up of today’s Supreme Court decision to uphold the constitutionality of the Patient Protection and Affordable Care Act, which requires businesses with more than 50 employees to provide health insurance for their employees and mandates that all individuals have coverage. … Pingup, … is based in Massachusetts, which already has those requirements and the penalties to back them up. …

Today’s decision will at the very least begin to force small businesses to start defining their benefit strategies, says Dean Hatfield, senior vice president and health practice leader of The Segal Co., a benefits and human-resources consultancy.

Some small businesses, Hatfield says, may wait until the upcoming election (Republican Presidential candidate Mitt Romney has promised to repeal the law “on my first day if elected President of the United States”), but he cautions “that you can’t stand still while the world moves around you.” Indeed, Hatfield sees the new law as an opportunity for small businesses.




Mitt Romney, former governor of Massachusetts, 2008 US presidential candidate. (Photo credit: Wikipedia)

“Most small employers are looking to recruit and retain quality employees,” he says, and the law provides a way to offer employees a wider choice of benefit options through the insurance exchanges the law requires the states to create. “At the very least,” says Hatfield, “even if the company is not using the state exchange [to shop for insurance], the employer can use it to negotiate with insurance providers for lower premiums. You look on the exchange and say to your insurer, ‘I can get a better deal on the state exchange.’” …

[Vince Ashton, president and chief executive officer of HealthPass New York, a private health-insurance exchange that was formed in 1999], does not, however, believe the PPACA fixes everything. “We have a broken system,” he says. “This is really insurance reform. There are things that need to be done to improve quality and affordability. There has to be delivery-system reform so that doctor and hospital payments are based on quality, on outcomes, not quantity.”

While not arguing that the law solves the country’s health-care problem, Rhett Buttle, government affairs director of Small Business Majority, a small-business advocacy group, does believe it begins to “level the playing field” for small and big businesses. Exchanges, he says, “allow small businesses to band together and be competitive with benefits. … Now they can offer more choice, and that helps them recruit and retain.”




Maximum Out-of-Pocket Premium Payments Under PPACA (Photo credit: Wikipedia)

Another benefit, Buttle says, is that heretofore people were tied to their jobs because they needed the insurance they provided. “Now,” he says, “people can go out and start small businesses, as they have the option to buy affordable health care.”

Buttle buttresses his argument with results from a recent poll conducted by the Small Business Majority of 800 small-business owners with 100 or fewer employees in Florida, Illinois, Louisiana, Michigan, Missouri, Texas, and Virginia. It found that 66% of small-business owners said they would either use or consider using their state exchanges to purchase insurance, and 54% of qualified business owners said they were already taking advantage of the law’s small-business health-care tax credit.

In stark contrast, a May General Accounting Office report said that fewer small employers claimed the credit in 2010 than were eligible for it. According to the report, only 170,300 small employers claimed it out of a potential pool estimated to be 1.4 million to 4 million. In 2014 the maximum credit will rise to 50% of the employers’ contribution from the current 35%.

Not all small-business organizations share Small Business Majority’s enthusiasm for the PPACA. In a statement today, Dan Danner, president and CEO of the National Federation of Independent Business, which was one of the parties that brought the suit to bring down the individual mandate and the expansion of Medicare provisions in the act, described the individual-mandate portion of the act as “a tax on all Americans,” and promised to continue fighting for its repeal. …

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