Small business owners and employees stand to benefit the most from current health reform proposals under consideration by Congress, according to a recent Commonwealth Fund report.
According to the report, provisions to extend healthcare coverage and repair the small group insurance market would alleviate high premium costs, high broker fees, underwriting and a lack of transparency about benefit packages that small business owners currently face.
"Small businesses are vital to the strength of our economy, and under our current system they don't have the ability to provide affordable, comprehensive health insurance to their employees," said Commonwealth Fund President Karen Davis. "Health reform provisions that take into account the insurance problems currently facing small business owners and their employees will provide security and stability to a large and important segment of the American workforce and their families."
According to the report, “Out of Options: Why So Many Workers in Small Businesses Lack Affordable Health Insurance and How Healthcare Reform Can Help,” of the estimated 39 million Americans who work for small businesses – defined as those with fewer than 50 employees – only 25 percent of them have health insurance through their employer,
While some workers buy coverage or obtain it through a family member, 52 percent of people working for small businesses are uninsured or underinsured, compared to 28 percent working for larger firms. The gap in employer coverage between large and small firm employees widened over 2003 and 2007.
When small business employees do have coverage, it's often less comprehensive: 48 percent have health insurance plans with lifetime coverage limits, compared to 37 percent of employees in large firms.
The report analyzed specific pieces of legislation that would have an effect on small business and found several broad categories of reform that would improve the ability of small businesses to provide coverage and for their employees to afford coverage if they do not.
According to the study:
- The ability to purchase health insurance through the new health insurance exchange would guarantee a standard benefit package, eliminate lifetime maximums and control premium costs.
- An exemption from any requirement to offer health insurance to employees or pay into a fund to finance coverage would protect very small businesses.
- Tax credits provided to small businesses offering health insurance to their workers would help further offset premium costs for businesses that choose to offer coverage to their employees. The tax credits would vary depending on size of the firm, the average wage and the percent of the premium that the employer pays.
- Premium subsidies to purchase coverage through the health insurance exchange and higher income eligibility limits in Medicaid would help those small firm low-wage workers who do not have access to health benefits through their jobs.
"Small businesses and their employees have a great deal to gain from the health reform proposals under discussion in Congress," said Sara Collins, a co-author of the report and the Commonwealth Fund's vice president for affordable health insurance. "The reforms have the potential to increase both the affordability and comprehensiveness of health insurance available to small businesses and individuals by protecting them from underwriting on the basis of health, establishing new standards for health benefits and lowering their premium costs."