Lower Premiums, Stronger Businesses

The President and his team have discussed this problem with small business owners from across the country and we know they don’t want to stop providing coverage to their employees. Small businesses are like families and small business owners want to give their employees the coverage they deserve. Unfortunately, the high cost of health care is making it impossible for many small businesses to provide health benefits.

Today, HHS Secretary Kathleen Sebelius has released a new report, Lower Premiums, Stronger Businesses: How Health Insurance Reform Will Bring Down Costs for Small Businesses. The report looks at the current status quo and outlines how reform will help solve this problem and bring costs down for small businesses. Specifically, reform will.

• Create an insurance exchange. Health insurance reform will create a health insurance exchange that pools small businesses and their employees with millions of other Americans to increase purchasing power and competition in the insurance market (a luxury only large firms currently enjoy).  Increased purchasing power and competition, in turn, make premiums more affordable.  The exchange will also reduce administrative costs for small businesses and their employees by enabling them to easily and simply compare the prices, benefits, and quality of health plans.
• Provide a small business tax credit.  On top of the potential savings created by the health insurance exchange, an estimated 3.6 million small businesses nationwide could qualify for a tax credit to make coverage for their employees even more affordable. For example, a firm with 9 employees and an average wage of less than $20,000 per employee could receive a credit of 35 percent off its premium costs in 2011 under the amended Senate Finance bill, or a credit of 50 percent off its premium costs under both the Senate Finance and House Tri-Committee bills in 2013.
• End the “hidden tax” on small businesses that provide health insurance.  Premiums are high, in part, because of a “hidden insurance tax” of more than $1,000 added onto every family policy that covers the cost of care for those without insurance.  Health insurance reform will benefit small businesses that already provide health care by expanding health care coverage to all Americans and removing this hidden tax.  These reforms will enable streamlined, efficient coverage for all Americans.
• Prevent arbitrary premium hikes. In the current health insurance system, small businesses can see their premiums skyrocket if just one or two workers fall ill and accumulate high medical costs.  Health insurance reform will prevent insurance discrimination based on health status, meaning that small businesses will no longer be unfairly penalized if a worker falls ill.

These are just some of the ways health insurance reform will support small businesses and help ensure all Americans get the secure, stable coverage they need. To learn more, read the full report by visiting www.HealthReform.gov.

Linda Douglass is Communications Director for the Office of Health Reform