Small business options delayed in new health care law

Feds unable to meet health care deadline

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WASHINGTON -- Unable to meet tight deadlines in the new health care law, the Obama administration is delaying parts of a program intended to provide affordable health insurance to small businesses and their employees -- a major selling point for the health care legislation.

The law calls for a new insurance marketplace specifically for small businesses, starting next year. But in most states, employers will not be able to get what Congress intended: the option to provide workers with a choice of health plans. They will instead be limited to a single plan.

This choice option, already available to many big businesses, was supposed to become available to small employers in January 2014. But administration officials said they would delay it to 2015 in the 33 states where the federal government will be running insurance markets known as exchanges. And they will delay the requirement for other states as well.

The promise of affordable health insurance for small businesses was portrayed as a major advantage of the new health care law, mentioned often by White House officials and Democratic leaders in Congress as they fought opponents of the legislation.

Supporters of the health care law said they were disappointed by the turn of events. The delay will "prolong and exacerbate health care costs that are crippling 29 million small businesses," said Senate Small Business and Entrepreneurship Committee chairwoman Mary L. Landrieu, D-La. In the weeks leading up to passage of the health care legislation in 2010, she provided crucial support for the measure, after securing changes to help small businesses.

The administration cited "operational challenges" as a reason for the delay. As a result, it said, most small employers buying insurance through an exchange will offer just a single health plan to their workers next year.

Health insurance availability and cost are huge concerns for small businesses. They have less bargaining power than large companies and generally pay higher prices for insurance, if they can afford it at all. The 2010 law stipulates that each state will have a Small Business Health Options Program, or SHOP exchange, to help employers compare health plans and enroll their employees.

One of the most important tasks of the exchange is to simplify collection and payment of monthly premiums. An employer can pay a lump sum to the exchange, which will distribute the money to each insurance firm covering its employees.

The Obama administration told employers in 2011 that the small-business exchange would "enable you to offer your employees a choice of qualified health plans from several insurers, much as large employers can." In addition, it said, the exchange would "consolidate billing so you can offer workers a choice without the hassle of contracting with multiple insurers."

Exchanges are scheduled to start enrolling people Oct. 1, for coverage that begins in January. But the administration said the government and insurers needed "additional time to prepare for an employee choice model" of the type envisioned in the law signed three years ago by Mr. Obama.

The delay is "a real mistake," said D. Michael Roach, who owns a clothing store in Portland, Ore. "It will limit the attractiveness of exchanges to small business. We would like to see different insurance carriers available to each of our 12 employees, who range in age from 21 to 62. You would have more competition, more downward pressure on rates, and employees would be more likely to get exactly what they wanted."

John C. Arensmeyer, chief executive of Small Business Majority, an advocacy group, said the "employee choice" delay was "a major letdown for small business owners and their employees. The vast majority of small employers want their employees to be able to choose among multiple insurance carriers."

Small Business Majority supported Mr. Obama's health care law. And that support was invaluable to Democrats who pushed the bill through Congress. House Minority Leader Nancy Pelosi, D-Calif., who was then House speaker, cited the group's research as evidence that "small businesses will benefit from health insurance reform."

But in recent weeks, insurance firms urged the administration to delay the "employee choice" option. "Experience with Massachusetts has demonstrated that employee choice models are extremely cumbersome to establish and operate," Aetna said in a letter to the administration in December. Insurers said the administration was partly responsible for the delay because it did not provide detailed guidance or final rules for the small-business exchange until last month.

Businesses with up to 100 employees will be able to buy insurance in the exchanges. In 2014 and 2015, states can limit participation to businesses with 50 or fewer employees. Companies with fewer than 25 workers may be able to obtain tax credits for as much as two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.

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