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Small Business Health Insurance Costs Are Soaring: What States Can Do To Help

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SMALL BUSINESS HIRES

Politicians and pundits have focused a lot of attention on the Affordable Care Act's requirement that everyone have health coverage, but few have looked into the health insurance marketplaces -- the component of healthcare reform most important for small businesses.

Fortunately, people are beginning to pay closer attention. On Monday, the Department of Health and Human Services (HHS) released new guidelines state lawmakers can follow when setting up the marketplaces, also known as exchanges. If lawmakers set them up right, these marketplaces will allow small businesses to pool their buying power, driving down costs and allowing them to purchase high-quality insurance at lower rates just like big businesses.

The states are charged with implementing the exchanges by 2014, but only 10 have moved forward with legislation necessary to create them. The longer states wait, the more they risk missing the 2014 deadline and having HHS create the exchange for them. States should set the exchanges up themselves because they have more insight into the needs of their small business owners. States that do not pass legislation this year will find it challenging to build a successful exchange by 2014.

There is help out there for lawmakers willing to tackle the hard but necessary work of setting up the exchanges. The Center for American Progress and Small Business Majority issued a report on July 6 that will help legislators make sense of those rules and provide a roadmap they can follow to create a robust exchange that will significantly lower small business owners' premiums and give them more options for high-quality health insurance. The report focuses on the intricacies of creating an exchange, provides examples of successes and failures experienced by states that have already created them and offers advice on how to get it right the first time. Small business owners like Walt Rowen, owner of Susquehanna Glass Company in Pennsylvania, are counting on lawmakers to do just that.

The Columbia, P.A.-based small business, which opened its doors more than 100 years ago, survived the Great Depression, wartime and the recent economic downturn by ensuring its factory stays efficient and by diversifying and expanding the type of work it does. But soaring healthcare costs -- one increase came in at an outrageous 160 percent above the previous year's rate -- had Walt wondering if the company had finally encountered an obstacle it couldn't overcome. If done right, health insurance marketplaces will make volatile premium hikes like his 160 percent zinger a thing of the past and the glass company can thrive for another 100 years and beyond.

Lawmakers have a host of important decisions to make when creating an exchange, such as whether it should be an active or passive purchaser, what role brokers should play and whether the exchange should cater to individuals and small businesses jointly or separately.

But these issues are just a fraction of the whole. Healthcare reform, and exchanges in particular, are expansive and complicated. Policymakers must give themselves time to sift through the complexities. Roadmaps like the one released last week will help legislators smoothly implement these complex reforms. State officials have the chance to drive our nation's chief job creators down the road to less financial burden and more economic opportunities through state exchanges. Walt Rowen, and millions of other small business owners like him, are counting on them to get it right.