02 Apr Health Law Provision for Small Business Is Delayed – important info for small footwear companies
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. 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 Senator Mary L. Landrieu, Democrat of Louisiana and chairwoman of the Senate Committee on Small Business and Entrepreneurship.
In the weeks leading up to the passage of the health care legislation in 2010, Ms. Landrieu 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 the collection and payment of monthly premiums. An employer can pay a lump sum to the exchange, which will then distribute the money to each insurance company 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 on Oct. 1, for coverage that begins in January. However, 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 President Obama.
D. Michael Roach, who owns a women’s clothing store in Portland, Ore., said the delay was “a real mistake.”
“It will limit the attractiveness of exchanges to small business,” Mr. Roach said. “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, the chief executive of Small Business Majority, an advocacy group, said the delay of “employee choice” 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,” Mr. Arensmeyer said.
Small Business Majority supported Mr. Obama’s health care law.
And that support was invaluable to Democrats who pushed the bill through Congress. Representative Nancy Pelosi of California, who was speaker at the time, cited the group’s research as evidence that “small businesses will benefit from health insurance reform.”
However, in recent weeks, insurance companies 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 that 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 up to two years of coverage bought through an exchange. States can open the exchanges to large employers in 2017.
A few states running their own exchanges, including California and Connecticut, said they planned to offer an “employee choice” option