Missouri small-business owners discuss health care reform benefits

Wednesday, March 23, 2011 | 9:49 p.m. CDT; updated 7:14 a.m. CDT, Thursday, March 24, 2011

COLUMBIA — Government and advocacy group representatives made a stop in Columbia on Wednesday to engage small-business owners in conversation about health care reform and how it could impact them.

The U.S. Department of Health and Human Services, as well as Small Business Majority, led the discussion called "One Year Later: The Affordable Care Act and Missouri Small Businesses."

For more information

The Missouri Health Advocacy Alliance, the AARP, the Health Care Foundation of Greater Kansas City and the Small Business Majority will host another round table discussion Thursday at the Marriott, Country Club Plaza in Kansas City.


Registration is available online.

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"Seniors and small businesses are the most misinformed about their benefits," said Judy Baker, regional director for the U.S. Department of Health and Human Services, who spoke at the meeting. 

About 25 people, some of whom were small-business owners, attended the discussion led by Baker; Jay Angoff, senior advisor to the secretary of the U.S. Department of Health and Human Services; and Jessica Stone, outreach coordinator for Small Business Majority.

According to a report by Families USA and Small Business Majority, there are nearly 93,000 businesses across Missouri that employ 25 or fewer workers — making small business a huge part of Missouri's economy. 

Stone said less than half of businesses that employed three to nine employees offered health coverage to their workers in 2009, while 95 percent of businesses with more than 50 workers provided insurance. She said — and the other speakers agreed — that this gives employees incentive to work for larger companies, a trend that stunts the growth of small businesses.

Small-business owners have found it difficult — if not impossible — to obtain affordable health care plans, Baker said in her introduction.  

The Patient Protection and Affordable Care Act became effective March 23, 2010. The presenters said several provisions of the act that have gone into effect over the past year could positively impact small-business owners immediately.

Current benefits for small-business owners

Angoff outlined four benefits of the health care reform bill for small-business owners, including:

  • A tax credit for employers with up to 25 workers.

Small businesses that offer coverage to their workers can receive a tax credit for up to 35 percent — 25 percent for nonprofit organizations. To qualify, companies must cover at least half of each employee's insurance premiums. In 2014, such businesses will be eligible for a tax credit of up to 50 percent — 35 percent for nonprofits. 

"This is all carrot, no stick," Angoff said of the tax credits, drawing laughs from the attendees. 

During her address, Stone said the Small Business Majority website features an interactive calculator that can estimate tax credits for small-business owners that can help them see and understand their potential savings.  

  • An Early Retiree Reinsurance Program.

The program provides $5 billion in financial assistance to employers to maintain coverage for retirees who are not yet eligible for Medicare. As of Feb. 23, lists 167 companies that have been accepted into the program. While applicants are accepted every day, the list is updated monthly. 

  • The Medical Loss Ratio Requirement Ratio 

The medical loss ratio is defined as the percentage of premium dollars that an insurance company spends on medical care and quality improvements as opposed to administrative costs and profits. Health plans for small businesses will be required to spend at least 80 cents to the dollar on providing and improving medical care to ensure people are getting a better value, Angoff said. 

  • Accountability for rate increases 

Previously, insurance companies didn't have to file their rates with an insurance department in Missouri. Angoff said companies now must file any proposed rate increase of 10 percent or more with the state or — if the state doesn't have the necessary department set up to handle this — with the federal government. The rates are then reviewed and changes are required to be posted online. 

Angoff said one of the goals of the health care reform bill is to simplify information for consumers. Several of the small-business owners in attendance raised concerns about health literacy, saying it's common for people to feel confused or overwhelmed by health care policies. Angoff acknowledged the problem, saying complexity has "been a friend of insurance companies."

Common misconceptions

Some of the small-business owners asked for advice on how to address issues or complaints that have been brought up to them in the past, such as the misconception that the rules for small businesses will cost jobs.

Stone said the tax credit for small businesses is so significant that it could help business owners hire new employees and expand their businesses, creating jobs.

Another issue small-business owners have is the thought that reform would impose unwanted obligations on business owners.

"This is simply not true," Angoff said. There are no employer mandates in the law and no employer responsibility requirements at all for businesses with fewer than 50 workers, he said. 

All of the speakers addressed the concerns that since rates have continually gone up, reform will ultimately cost small-business owners more. 

Health care reform focuses on the big picture, Angoff said. People who are uninsured cost more because they generally go to an emergency room when a problem has become severe, he said. People with insurance end up having to cover these costs, one way or another. Rates are up because of current market conditions. However, this is an investment to shift costs and ultimately reduce them in the long run, Stone said.

Baker said the shift would save $1.2 trillion in 20 years.

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