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Small Business and the ACA

Last September, ITUP’s Ashley Cohen authored this report analyzing health reform’s impact on small- and medium-sized businesses. The report concluded that “Small businesses have much to gain from health reform … The new legislation aims to make coverage more available and affordable for small businesses. It also provides employees and employers with greater freedom when changing jobs by guaranteeing access to coverage if they are no longer eligible for their current employer’s insurance. In addition, employer assistance has the potential to encourage new business creation and entrepreneurship, in that it largely eases the financial burden of offering health benefits for start up employers. This financial support for the self-employed and smaller businesses has the potential to boost business and job growth.”

Today, our friends at Small Business Majority released findings of a national opinion survey of more than 600 small business owners. The poll gauged small business owners’ views on two key provisions of the Patient Protection and Affordable Care Act: (1) small business tax credits and (2) the insurance exchanges.

Most notably, the report concluded that nearly one-third of small employers who currently don’t offer health insurance to their employees said they are more likely to do so because of the tax credits and the Exchange. This data is promising, suggesting the large impact that health reform could have on coverage for tens of thousands of uninsured, working Californians.

In our Exchange Issue Workgroup, participants are discussing implementation measures that would help support the California’s Health Benefit Exchange and ensure its legitimacy and longevity. Regarding the Exchange’s Small Business Pool (aka SHOP) in particular, Workgroup members recommend that the state and the Exchange Board incorporate the following mechanisms to make the SHOP more attractive to small- and medium-sized employers:

  • Avoid overly complex mechanisms and navigation requirements;
  • Consolidate small businesses billing practices, something that Connecticut and New York (HealthPass) have been able to do;
  • have employees’ share of premiums automatically deducted from the employees’ paychecks or bank accounts;
  • After the Exchange has been successfully established and all the new insurance reforms are implemented, commission an actuarial study to quantify the impact to rates if the individual and small groups markets were combined; and
  • Allowing employers to contribute pro rata for flex- and part-time workers in order to ensure continuous coverage to these individuals.