Adjust Health Law for Small Businesses
By Jon Hurst
Congressional Republicans and President Obama continue to wrangle over the future of the nation’s healthcare law. But they need to focus on fixing the law rather than repealing it or threatening vetoes on any form of improvement.
It is no surprise to us in Massachusetts that the shortcomings of the basic framework of the Affordable Care Act mean marketplace discrimination for small businesses and their employees. We saw that in our state model of the ACA. Powerful lobbying groups protected certain consumer groups from harm. Big businesses were protected and retained the ability to self-insure, while lower-income individuals qualified for taxpayer-funded premium assistance.
Left unprotected and arguably disadvantaged were those in the middle — owners and employees of small businesses. Several years of double-digit premium increases here resulted in changes to state law to help empower small businesses.
Washington should make changes to the ACA like those made in Massachusetts to make sure health-insurance reform works for everyone. Here are four recommendations:
• Allow existing organizations — associations, professional societies, and chambers of commerce — to form nonprofit, small-business cooperatives to enhance purchasing power, provide more choices, and better educate their members and employees on the importance of wellness programs and the use of provider-transparency tools. This is how small businesses want to buy their insurance. Consider that, since their start in 2012, the Massachusetts cooperatives have served more small businesses than the state’s Health Connector, and they haven’t cost the taxpayer one dime.
• Allow insurers to give discounts to small businesses as they get bigger. It is a fact that, for both actuarial and administrative reasons, the more people a business covers, the lower the cost per person. Yet the Affordable Care Act is phasing out this ability for any employer with fewer than 99 employees, since the law eliminated the size-rating factor from the small-group market.
Those businesses with 100 or more employees are not hurt by this policy, which in turn gives them a huge premium competitive advantage. The phaseout of the size-rating factor means artificially higher premiums for growing small businesses. The logical way to avoid unreasonable premiums is to leave the fully insured small-group market entirely and to self-insure. Already, 55% percent of the Massachusetts market is self-insured. This trend will grow rapidly unless this discriminatory ACA policy is fixed.
• Change the definition of full-time employee from 30 to 35 hours per week. Massachusetts used the 35-hour threshold without disruption, but the same can’t be said of the 30-hour ACA requirement. Most small employers consider employees working 35 hours or more to be full-timers, but few have the same view about 30 hours.
• Allow small businesses to avoid state mandates — just as big businesses do. Self-insured employers operate under federal law and can avoid state mandates. But small, fully insured employers have no escape. Twenty-four new mandates and/or assessments have been passed in Massachusetts since 2006, making the health-insurance marketplace increasingly discriminatory. The ACA needs to address the proliferation of state mandates.
Unfair provisions in the healthcare law are putting small businesses and their employees at a huge disadvantage.
The Affordable Care Act can work for everyone, but not under today’s model. Unfair provisions are putting small businesses and their employees at a huge disadvantage, endangering their futures. Washington needs to fix the problems.
Jon Hurst is president of the Retailers Assoc. of Massachusetts.