By Emily Curran and Dania Palanker
On February 7, the House Committee on Small Business held a hearing titled, “Reimagining the Health Care Marketplace for America’s Small Businesses,” to discuss the challenges small businesses are facing in the health insurance marketplaces and to offer potential solutions for the next phase of reform. Georgetown’s own Dania Palanker provided testimony on how the ACA has helped to lessen the burdens for small business owners who wish to provide health coverage to employees. Other panelists included Tom Secor, President of Durable Corporation, Keith Hall, President and CEO of the National Association for the Self Employed, and Kevin Kuhlman, Director of Government Relations for the National Federation of Independent Business.
The hearing testimony and questioning focused on the benefits and obstacles small business owners have encountered purchasing health insurance for themselves and their employees, including ongoing concerns of affordability, access, and flexibility. While many panelists highlighted the complexities of adjusting to a new regulatory environment and weighed in on Republican proposals to replace the health law, Palanker used the opportunity to draw a contrast between health care offered before and after the ACA.
Palanker emphasized that in a pre-ACA environment, small businesses lacked market power when negotiating premiums and were often saddled with high administrative costs or few coverage options. These barriers led to a steady decline in the number of small businesses offering coverage. For example, in 2012, only half of businesses with 3 to 9 workers offered health insurance benefits, compared to 98 percent of business with 200 or more workers. Not only were small business employees less likely to receive an offer of coverage, but when coverage was offered, it was often less generous.
To address these shortcomings, Palanker explained how the ACA overhauled the small group insurance market by:
- establishing national minimum standards of coverage (e.g., essential health benefits), including maternity care, mental health and substance use treatment, and prescription drugs;
- prohibiting insurers from charging higher premiums to groups with higher healthcare costs;
- ending annual and lifetime limits, and
- making the individual health insurance market a viable new option for small business owners and their workers.
Palanker testified that these new policies have worked to provide small businesses with increased choice, while promoting comprehensive benefit packages and protecting business owners and their employees from discrimination. Today, small businesses are beginning to reap the benefits of these reforms, witnessing an unprecedented slowdown in healthcare cost growth and smaller rate increases compared to the individual market. The law helped to reduce “job lock” and increase entrepreneurship, while simultaneously reducing the uninsured rate for small business workers by 10.8 percentage points, within the first year of implementation.
Despite some remaining challenges, Palanker concluded that future reforms should build upon the current marketplace, which has made significant headway in expanding access to affordable coverage. At the end of the day, Palanker noted that recent Republican proposals to repeal and replace the ACA are good for the “healthy and wealthy,” while doing little to improve the lives of low to middle income earners or those with dire healthcare needs.