Your Bottom Line: What Health Reform Means

For Wisconsin Small Businesses

Jessica StoneSmall Business Majority

About Small Business MajorityAbout Small Business Majority

• Public policy advocacy organization – founded and run by small business owners

• National – based in California – offices in Sacramento, Washington, DC and New York

• Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed

• Very focused on healthcare over the past 5 years – top issue in all of our research

Small businesses struggling with costsSmall businesses struggling with costs

Soaring cost of health insurance – especially for small businesses – 54% of businesses <10 employees don’t offer (Kaiser study)

28% self-employed: not covered

Small firms pay 18% more than large businesses

Our national study: Small business health costs will more than double over the next 10 years – $2.4 trillion total

Our national study: Small business health costs will more than double over the next 10 years – $2.4 trillion total

Small businesses struggling with costsSmall businesses struggling with costs

Our opinion surveys: 86% of small businesses don’t offer because of cost; 72% of those who do offer say they are struggling to do so

Our opinion surveys: 86% of small businesses don’t offer because of cost; 72% of those who do offer say they are struggling to do so

The new federal lawThe new federal law

• Builds on and seeks to fix our existing healthcare system

• Aims to rein in healthcare costs; reduces deficit by over $100B by 2020; by $1.3T by 2030 (according to the Congressional Budget Office)

• Implementation is primarily the responsibility of the states – essential to have small business input

• Important immediate benefits – other key provisions to be implemented over the next 4 years

Immediate Consumer Protections Immediate Consumer Protections

• Bans health plans from dropping insurance coverage when an individual gets sick (Sept. 23, 2010)

• Insurers will no longer be able to deny coverage for patients with pre-existing conditions (2010 for kids, 2014 for adults)

• Ban on lifetime caps that rescind coverage when people get sick (Sept. 23, 2010)

• Adult children under 26 can stay on their parents’ plan (Sept. 23, 2010)

• First-dollar coverage for preventative care for all new plans (Sept. 23, 2010)

3 Key provisions of health reform for small businesses3 Key provisions of health reform for small businesses

• Provides immediate tax credits for most small businesses ($40 billion in credits by 2019)

• Provides immediate access to a Preexisting Condition Insurance Plan for the self-employed

• Establishes a competitive marketplace for small businesses and the self-employed

I. Small business tax creditsI. Small business tax credits

Our report: 86,100 Wisconsin small businesses are eligible (86.8% of all businesses); 25,800 businesses eligible for the maximum credit

Our report: 86,100 Wisconsin small businesses are eligible (86.8% of all businesses); 25,800 businesses eligible for the maximum credit

II. Preexisting Condition Insurance Plan (formerly high-risk pools)

II. Preexisting Condition Insurance Plan (formerly high-risk pools)

• Available to individuals -- incl. self-employed

• Takes effect immediately

• Eligibility: Individuals who have been uninsured for six months and have been denied coverage for a preexisting condition or have a letter from a physician stating they have a preexisting condition.

• Plans = lower premiums due to federal funding ($5 billion over 5 years)

• Available until full implementation in 2014 (no gap in coverage)

PCIP in WisconsinPCIP in Wisconsin

• Run by the state Health Insurance Risk-Sharing Plan (HIRSP)

• www.hirsp.org

Other immediate changesOther immediate changes

• Grants to study small employer wellness programs

• $9M granted in 2011

• Reduce the risk of chronic disease among employees and their families through evidence-based workplace health interventions and promising practices.

• Promote sustainable and replicable workplace health activities.

• Promote peer-to-peer healthy business mentoring.

• Medical Loss Ratio or the “80/20 rule” (2011) and Rate Review

• Increased access to care - community health centers (2011)

III. State Health Insurance Exchanges: Coming in 2014III. State Health Insurance Exchanges: Coming in 2014

• Large marketplace to shop for health coverageo Purchasing pool to increase buying power and reduce

administrative costs

o Small businesses with fewer than 100 workers eligible

• Private insurance plans will competeo Improved competition will increase employer choice

o Exchange will negotiate with insurers on behalf of small businesses to ensure higher quality and lower costs

• RAND Studyo Exchanges will expand coverage to 85.9% of small

business employees, up from 60.4% today, an increase of 10.5 million workers

State Health Insurance ExchangeState Health Insurance Exchange

• One-stop shop web portal

Small Business Exchange

INSURANCE PLANS

EXCHANGEChoice

ComparisonBilling

Tax Credits

SMALL BUSINESSES

o Compare plans and get detailed information about price, quality and service

o Plans organized by category: bronze, silver, gold, platinum

o Calculator to compare costs across plan options

o Streamlined billing process

State Insurance Exchange: Other BenefitsState Insurance Exchange: Other Benefits

• Many small business workers and self-employed entrepreneurs will receive affordability tax credits towards their premiums

o Up to 400% of federal poverty level (approx. $90,000 for a family of four)

• Incentives for administrative efficiency and modernization

• Expanded coverage and individual responsibility requirement – reduce hidden tax

State insurance exchangeState insurance exchange

• States determine whether to keep the individual and small group markets separate or merge them

• Insurance will still be sold outside exchange

• Members of Congress must use the exchange

CO-OP Plans: More choiceCO-OP Plans: More choice

• $3.8B invested in new CO-OP health plans

• Plans must operate with a strong consumer focus, profits must be used to further its mission through lower premiums, improved benefits, or improved quality of care

• A team of small business, community and health insurance professionals with an 11-member board formed the Common Ground Healthcare Cooperative in the Milwaukee, Wisconsin region.

• HHS awarded the new WI CO-OP a $56.4 million loan.

• http://www.commongroundhealthcare.org/

What does this all mean for your bottom line?What does this all mean for your bottom line?

Changes in average employer contribution per person covered

Exchange – key issuesExchange – key issues

• Active vs. passive (can the exchange negotiate?)

• Regional exchanges

• Role of brokers

• Expanding exchange to large firms in 2017

• Incorporation of wellness and prevention programs

• Administrative/design issues: billing, payment, web, etc.

• Effective education and outreach

• Businesses with fewer than 50 workers – 96% of all businesses – are exempt from any requirement to offer insurance

Shared responsibilityShared responsibility

ResourcesResources

• National HHS website: www.healthcare.gov

• Our website: www.smallbusinessmajority.org

o “What’s in Healthcare Reform for Small Businesses”

oDetailed FAQ

o Tax credit calculator

Join Our NetworkJoin Our Network

• Erica Dowell, Network Coordinator

• Email: edowell@smallbusinessmajority.org

• Direct: (202) 535-3244

Connect with us!

@SmlBizMajority

Small Business Majority

Ways to Get Involved:

Contact

• Receive a monthly newsletter

• Share your story for media requests

• Letters to the editor/Op-eds

• State events/Roundtables

• Fly-ins

• Webinars for business organizations