The country is halfway to full implementation of the Patient Protection and Affordable Care Act. While the misconceptions and misinformation have been flying for the two years since the bill was signed into law, they haven’t stopped some of its strongest provisions from padding bottom lines for many Ohio small business owners.
So what exactly does the law mean for small businesses?
For Goode Investment Management Inc. owner Bruce Goode of Cleveland, it means his business will qualify for the small business health care tax credit and he’ll be able to reinvest the saved money in expanding his company.
For Steve Tatar, sole proprietor of Ohio Knitting Mills, also in Cleveland, it means that come 2014, insurers will no longer be allowed to jack up coverage rates for his wife’s preexisting condition and his family will be able to get affordable insurance through the health insurance exchange. As he’s wanted to for some time now, Steve will finally be to hire employees with the money they’ll save on his wife’s medical expenses’which totaled $20,000 last year.
Simply put, the Affordable Care Act means better coverage at better prices for small business owners in Ohio and across the nation.
During tax season, the ACA helped small businesses save money through the small business healthcare tax credits as they filed their 2011 tax returns. More than 300,000 small businesses saved money through the credits last year and that number is expected to be higher this year. We know the credits are important to the nation’s smallest employers because they told us so: national opinion polling we released in 2011 found one-third of owners who currently don’t offer insurance are more likely to do so because of them. Moreover, one-third of those who already provide insurance for their employees say the credits make them more likely to continue doing so.
Cost containment mechanisms in the law are already tackling sky-high premiums for small businesses, as well. One provision helping to keep premium costs down is the medical-loss ratio (MLR) requirement. The MLR provision curbs excessive administrative healthcare costs. It requires that at least 80 percent of small businesses’ healthcare dollars be spent on patient care. When an insurance company exceeds the 20 percent cap for costs unrelated to patient care, it’s the company’s responsibility to foot the bill, rather than handing it over to their customer.
A provision that increases efforts to cut waste, fraud and abuse in the healthcare system is also hard at work. Federal authorities uncovered $4.1 billion in Medicare fraud judgments in 2011; that’s up 50 percent from 2009. Those savings will lower costs throughout the system, including for small businesses.
We’re only halfway to 2014 when the law takes full effect. In another two years, millions of small business owners who have seen their premiums climb for years will have a new option for purchasing health insurance.
The Affordable Care Act will bring innovative online marketplaces to the insurance landscape, giving small business owners and sole proprietors like Steve Tatar a place to pool their purchasing power so they have the kind of clout large businesses enjoy when they shop for coverage. On average, small business owners pay 18 percent more than large businesses for the same health plans. The new marketplaces’called health insurance exchanges’are intended to change that.
Small businesses we polled nationally like this idea of a marketplace. In fact, one-third of respondents who don’t offer insurance said they’d be more likely to do so when they have the option to use a health insurance exchange in 2014. But surprisingly, only three in 10 owners surveyed had actually heard about the new marketplaces. The same goes for the tax credits: 57 percent of owners were completely unaware of this immediate way to save money, which they could then invest in growing their business.
We owe it to these hardworking job creators to set the record straight on how the law cuts their costs and reshapes the market. Reform is something they’ve long been asking for. Now that it’s finally here, small businesses’ battle with healthcare costs is only half over: for them to fully benefit from the Affordable Care Act, it’s critical they understand how its provisions work for them. It’s more important now than ever that small business leaders, organizations and advocates working to reach out to the small business communities in Ohio make that happen.