Sun, Nov 09, 2014 - Page 9 News List

Small businesses in US still struggling to provide health insurance

Small-business insurance exchanges have been a failure so far, being barely functional in many states, and only 44% of small businesses offer coverage, from 52% a decade ago

By Reed Abelson  /  NY Times News Service

Illustration: Y. C. Chen

Brian Adams, who sells fireplaces in Indianapolis, is like many of the US’ small-business owners. As the cost of providing health benefits has climbed, he has struggled to afford coverage for his employees — a problem the new healthcare law was designed, in part, to address.

A year after the law’s introduction of the insurance exchanges, provisions that were supposed to help small businesses offer employee health benefits are largely seen as a failure. Adams, like many of his fellow business owners, is sending employees to the exchanges to buy their own coverage instead.

Nancy Smith, who runs the Great Arizona Puppet Theater in Phoenix, made a similar decision. Her business employs only a handful of people who need insurance, and she was able to offer only plans with high deductibles. She and her employees decided buying individual policies made the most sense.

“Everyone wanted to do it because our costs were too high,” Smith said.

Most of the focus regarding the US Affordable Care Act has been on whether individuals can find affordable coverage through the online marketplaces. However, the law also had the goal of creating a robust insurance market for small businesses by making tax credits available to businesses that provide coverage and creating small-business exchanges where companies could more easily find low-cost plans.

The small-business exchanges were barely functional in most states last year, and it remains to be seen whether the administration of US President Barack Obama will manage to stop the steady decline in the number of employers offering coverage to their workers. The administration is poised to try again when open enrollment began yesterday.

Federal officials say they do not know how many small businesses signed up for coverage in the small-business exchanges, but the numbers are likely to be small. In California, for example, only 12,000 people were enrolled through the state’s small-business exchange, compared with more than 1 million who enrolled as individuals there. To date, few businesses have availed themselves of the tax credits available for purchasing coverage for low-wage workers.

“There’s no denying that the program got off to a slow start in the first year,” said Linda Blumberg, a policy expert at the Urban Institute.

Federal officials were focused on making sure the individual marketplaces worked, she said.

Experts say it remains an open question whether the program, known as the Small-Business Health Options Program (SHOP), will eventually work.

“I think it will take a number of years, if it succeeds,” said Jon Gabel, a policy expert with NORC at the University of Chicago.

There remains strong opposition from brokers and some insurers who view it as a threat to their existing business, Gabel said.

Federal officials say they are committed to making the small-business marketplaces work over the next few years; five states are offering businesses early access to the online exchanges this year.

Officials say they are making the necessary technical fixes to allow for online enrollment this year since most employers were forced to fill out applications by hand. They also say they are working more closely with brokers and say more insurers will be offering plans for next year.

“Thanks to the Affordable Care Act, millions of small businesses and their employees will have more healthcare options, increased purchasing power and tax credits worth up to 50 percent of the employer’s premium contributions,” US Health and Human Services Department spokesman Ben Wakana said in an e-mailed statement.

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