Finding affordable health insurance for employees has always been a major challenge for small businesses looking to recruit and retain top-notch employees, especially since small businesses pay about 18 percent more than large businesses for the same policy, according to the U.S. Department of Health & Human Services.
Currently, about 98 percent of companies with at least 200 employees offer health insurance, according to the Kaiser Family Foundation’s Employer Health Benefits Survey. By contrast, 73 percent of companies with 10 to 24 employees, and half of companies with three to nine employees offer health insurance.
Many are hoping the Affordable Care Act’s creation of health insurance exchanges will help address this disparity.
Effective Jan. 1, 2014, small businesses with 100 or fewer employees will be able to buy health insurance via Small Business Health Options Program (SHOP) health insurance exchanges. These exchanges are marketplaces where insurance companies will compete to sell qualified health plans. A Congressional Budget Office report projects the exchanges will reduce small-business premiums by up to 4 percent.
Government officials will appoint health insurance experts to decide which plans are qualified and rate the plans so small-business owners can easily compare the plans’ benefits. Small-business owners will also rate the plans via satisfaction surveys so other owners can make better decisions.
Terry Gardiner, the Small Business Majority’s vice president for policy and strategy, told Health Affairs magazine that small-business owners need an exchange “that will fulfill many of the functions served by the human resources departments of larger businesses.”
The Affordable Care Act gave all 50 states and Washington, DC, the option of creating a state health insurance exchange. The SHOP exchanges will be within the state exchanges, which also will help individuals without health insurance. The theory was that state health insurance experts would be more attuned to the needs of small businesses in their states than federal health insurance experts.
However, many state officials oppose state exchanges because they oppose Obamacare overall. Small businesses, and individuals, in these states can join a partnership exchange or participate in the federal exchange.
According to the Kaiser Family Foundation, Washington, DC, and 18 states have declared they will participate in a state-based exchange: California, Colorado, Connecticut, Hawaii, Idaho, Kentucky, Maryland, Massachusetts, Minnesota, Mississippi, Nevada, New Mexico, New York, Oregon, Rhode Island, Utah, Vermont and Washington.
Seven states—Arkansas, Delaware, Illinois, Iowa, Michigan, North Carolina and West Virginia—have signaled interest in a partnership exchange that allows the federal government and a state to “work together to operate different functions of the exchange,” according to the U.S. Department of Health & Human Services. The other 25 states will default to the federal exchange, unless they reexamine their current opposition to the state or partnership exchanges.
At this point, the details are far from being ironed out. For example, in early February, Mississippi became the first state to have its health insurance exchange rejected by the federal government. "With a lack of support from your governor and no formal commitment to coordinate from other state agencies, we do not see a feasible pathway to conditionally approving a state-based exchange in Mississippi for 2014," the U.S. Department of Health & Human Services explained in a letter to the state.
Check out more small-business healthcare articles.
Martin Zabell has been a professional writer and editor for 29 years, with several thousand articles printed by newspapers and magazines. Martin blogs via Contently.com.