White House Hosts Small Business Call on Health Care Reform

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On Thursday, November 12, the White House and the U.S. Department of Health and Human Services hosted an hour-long conference call with small business owners from around the country to discuss health care reform. Administration officials participating in the briefing, "Health Care Reform and Small Businesses," included Ann Widger of the White House Office of Public Engagement and Dr. Meena Seshamani, author of the recent Department of Health and Human Services report Lower Premiums, Stronger Businesses: How Health Insurance Reform Will Bring Down Costs for Small Businesses.

Dr. Seshamani kicked off the briefing by providing listeners with an overview of her report, which found that the two key issues for small businesses are access to quality health care and the associated costs. "Small businesses are disproportionately burdened by the financial strains caused by rising health care costs," she said. "On average, small businesses pay up to 18 percent more than large firms for the same health insurance policy."

This difference is due in part to broker fees and health plan administrative costs that are three to four times higher than those in the large group market. "In a recent national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason," Seshamani explained.

The Department of Health and Human Services report describes how health insurance reform will lower premiums for small businesses in four important ways:

  • Creates a health insurance exchange that "that pools small businesses with employees with millions of other Americans to increase purchasing power and competition in the insurance market." This is expected to drive down the costs of premiums.

  • Provides an estimated 3.6 million small businesses with a tax credit. For example, a firm with nine employees and an average wage of less than $20,000 per employee could receive a credit of 35 percent off its premium costs in 2011 under the amended Senate finance bill.

  • Ends the "hidden tax" on small businesses that provide health insurance. Seshamani explained that premium costs are high, in part, because of a "hidden insurance tax" of more than $1,000 added onto every family policy that covers the cost of care for those without insurance. Health insurance reform will benefit small businesses that already provide health care by expanding health care coverage to all Americans and removing the hidden tax.

  • Prevents arbitrary premium hikes by preventing insurance discrimination based on health status, meaning small businesses will no longer be unfairly penalized if a worker falls ill.

Following the review of Seshamani's report, the briefing was opened up to questions from small business owners. One caller wondered why the health care bills do not go into effect until 2013. Both Widger and Seshamani explained that the timeframe was necessary to ensure that reforms are done properly, though, in the draft Senate bill, they added, small business tax credits will go into effect in 2011 and a "high risk pool" provision would start almost immediately.

Another caller expressed concern that businesses would choose to pay a financial penalty, which the government plans to impose on companies that do not offer employees health care, and this would dump a large number of people into the health insurance exchange. However, Seshamani reported that the Congressional Budget Office estimates that, under the current proposals, more companies will offer employees health insurance than in the past.

In related health care news, the USA Today on Politics blog reported that debate on the Senate health care bill, introduced this week by Sen. Harry Reid (D-NV), would begin in earnest on November 30, according Sen. Tom Harkin (D-IA), chairman of the Senate health committee. Harkin also said that he hopes to have a vote on the bill before Christmas.

In the meantime, the public remains deeply divided over the current health care reform proposals. In a Washington Post-ABC News poll, 48 percent of respondents said they support the health care reform proposals, and 49 percent said they do not. Furthermore, 30 percent strongly favor the current reforms under consideration in Congress, while 39 percent strongly oppose them. --David Grogan