On July 7, Senator Enzi and Senator Sanders convened a roundtable discussion about the challenges and opportunities facing small businesses and their efforts to offer affordable, high quality health care for their employees. The Senators are chairman and ranking member, respectively, of the Senate Health, Education, Labor and Pensions Committee Subcommittee on Primary Health and Retirement Security. In addition to Ms. Corlette, the subcommittee invited two small business owners, James Scott of Applied Policy in Alexandria, VA and Kelly Conklin, owner of an architectural woodworking firm in Kenilworth, NJ, as well as insurance broker (and business owner) Tom Harte from Hampstead, NH. Mr. Harte was also there representing the National Association of Health Underwriters (NAHU), a national trade association for health insurance brokers.
The discussion covered a wide range of issues and challenges confronting small businesses, from the status of the Affordable Care Act’s SHOP marketplaces to the trials of list billing, the risks of self-funding, and the looming change in the definition of “small group market” to employers with as many as 100 employees.
- SHOP Marketplaces: Although representing diverse interests, the witnesses agreed that the SHOP marketplaces have not performed as policymakers envisioned. They also agreed generally on the reasons why: a slow and cumbersome enrollment process, lack of interest among brokers, and tax credits that are insufficient and too narrowly drawn to attract employers’ interest.
- List billing: The business owners identified list billing as a major new headache associated with offering coverage. Before 2014, employers generally received a “composite rate” from their insurance company. In other words, the insurer tallied up the ages of the employees within a group and gave the employer a total premium amount for the group. Now however, each employee and dependent has a separate premium amount attached to them based on their age. Mr. Harte noted that for one company the premium amount for a 20-something employee was $4500 but for a 63-year-old employee it was $13,000. While age rating is not new to the Affordable Care Act, its effects are transparent for the first time for employers.
- Self-funding: The witnesses discussed the risks of self-funding for small employers, and the potential that more mid-sized businesses would have an incentive to self-fund if the definition of the small group market is expanded to 100. Ms. Corlette also noted the availability of self-funding + stop-loss insurance packages designed to mimic traditional health insurance. She called for the federal government to clarify that plans in which the insurer bears most of the claims risk are not considered self-funded, but rather should be regulated under the same rules as fully insured plans.
- Defining the small group market: The group generally agreed that expanding the definition of the small group market to 100 could cause disruption for mid-sized employers, most of whom will also be facing the employer mandate requirements at the same time. While some groups could benefit from the small group market reforms in the Affordable Care Act, such as the ban on health status and gender rating, others will face premium increases.
A video of the roundtable and the witnesses’ statements are available for download here.