Health Reform Helping Small Businesses

stethoscopeOne year ago on Wednesday, President Obama signed into law a historic package of health reforms that has already begun to improve the state of health care in Nebraska and all over the United States.  In honor of this momentous achievement, we will be blogging on some of the most notable aspects of the Patient Protection and Affordable Care Act (ACA).  Today’s post focuses on what the ACA is doing to help out Nebraska’s small businesses.

Under the ACA, small businesses in Nebraska with fewer than 25 full-time employees and with annual wages not exceeding $50,000 are eligible for a new small business tax credit for up to 35% of their health care premium expenses.  With health care costs rising at three times the rate of wages, this tax credit makes it possible for over 33,100 small businesses in Nebraska to offer coverage to their employees for the first time or continue coverage that would otherwise be unaffordable.

This is good news for Nebraska’s small business and entrepreneurs.  Currently, small businesses in Nebraska are often forced to decide between providing either no coverage at all or inadequate policies that are not a good value given what they cost.  Small business coverage is often more expensive than coverage for larger businesses because small businesses lack the bargaining power and economies of scale that are generally needed to acquire quality, affordable coverage.  In 2008, less than one-fifth (19.2 percent) of Nebraska businesses with fewer than 10 workers (and 60.5 percent of those with 10 to 24 workers) offered health insurance to their employees, whereas nearly all businesses with 50 or more workers (97.0 percent) offered coverage.  This results in workers either struggling to find insurance in the individual marketplace, going without insurance or seeking employment with a larger firm that offers health coverage.  It can also impede the development of new small businesses, particularly in rural areas.

The ACA will continue to help small businesses in Nebraska in the future through the creation of a state health insurance exchange.  The exchange will provide a marketplace where small businesses can shop for coverage that is comprehensive and affordable. By allowing small businesses to pool their buying power, the exchange will make premiums more reasonable and predictable for small businesses, which are currently left to fend for themselves in an open market with few protections.

In addition to these reforms in the ACA specifically targeting small businesses, other reform measures such as preventive care and improved consumer protections will indirectly benefit businesses by improving quality while reducing health care costs as a whole.  Check our blog in the coming days to see how else the ACA is helping provide quality, affordable health care for all Nebraskans.

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