With sweeping federal health care reform now on the books, business owners are scrambling to make sense of a new range of tax breaks, coverage responsibilities and potential pitfalls by turning to benefits consultants, accountants and insurance brokers for advice and perspective.
Although the $940 billion legislation alters the way small businesses buy and supply health insurance, many of the changes won't kick in until 2014. And clear answers are at a premium today.
"Small business owners will have more choices and greater accessibility to affordable health insurance, which will help them to attract and keep a talented workforce," said Kevin Galvin, owner of Connecticut Commercial Maintenance Inc. in Hartford. He says small businesses like his will be the big winners under health care reform.
Galvin said the new bill will help level the playing field for small companies by providing health insurance coverage at the same costs larger firms pay.
The Small Business Health Options Programs, known as "SHOP Exchanges" — essentially a purchase pool that gives employers buying power and pools risk — will create healthy competition among insurance carriers, which will help control costs, said Galvin.
Galvin, an entrepreneur who employs four workers, helped organize a coalition of 19,000 company owners in Connecticut known as the Small Businesses for Health Care Reform.
Thelawgives small businesses a voice in the health care debate, according to Galvin. "This is a great time for small businesses to be excited. Health care coverage for business owners and their employees in Connecticut is astronomical and I think this will change that," said Galvin.
Farmington attorney Jennifer Jaff said that while the new bill isn't perfect — and in some cases, years from being phased in — it is a good start.
"It will be many years before we see the full effects of health reform," said Jaff, executive director of non-profit Advocacy for Patients with Chronic Illness Inc.
Small business owners in Connecticut and across the country are being forced to scale back on how much they contribute to company health plans or slash their coverage altogether. Jaff believes the new bill could actually help revitalize the down economy.
"Five years ago, our organization was paying $440 per person a month for healthcare coverage," said Jaff. "Today, that same cost is $1,165 per person. I have one employee and she receives health insurance from her husband's plan. I want to hire another attorney, but I've been waiting to see what happens first."
Other groups say that while the legislation President Obama signed on March 23 addresses affordability and accessibility, it does not emphasize mandatory initiatives that would improve health care delivery and keep costs down.
"I think it's a good thing the bill eliminates pre-existing conditions and allows dependents up to age 26 verses 24 to remain on a policy," said Michael Triplett, president of Cigna HealthCare's government segment and southeast region.
"But the new law ignores any requirements or initiatives that would mandate quality improvements," said Triplett. "For example, we should mandate regular breast cancer screening, teach people how to control high blood pressure or require correct prenatal care for pregnant women."
Others, however, see major problems ahead.
"Honestly, this whole bill scares the hell out of me," said David Fernandez, president of OEM America, a professional employer organization in East Hartford that works with small companies and insurance carriers.
"We're going to add 32 million people to the rolls," said Fernandez. "There is going to be more utilization of our healthcare resources and no rules about pre-existing conditions. At the same time, insurance companies won't be able to raise their rates."
"If you burden insurance companies like this, what do you think is going to happen? They are going to write up policies with less and less of an appetite," said Fernandez.
Fernandez predicts the new bill will drive up the cost of health care and force businesses that provide services like limo transportation, lawn maintenance, maids, taxis and delivery drivers to raise their prices.
Dr. Daniel Fass, a spokesperson for the national grassroots organization Doctors for America, begs to differ. "It gives everyone access to healthcare coverage and, at the same time, more customers for the insurance companies. I think that's a good business model."
The Greenwich Hospital physician was one of 150 physicians invited to the White House last fall when Obama unveiled his health care plan and he was there again last week when the president signed the new bill.
"Local employers are certainly concerned, in part because there are a lot of individual changes that need to be weighed together," said Barry Schilmeister, a partner with Mercer, a global firm specializing in employee benefits. He works in the firm's Norwalk and New York City consulting offices.
In Mercer's 2009 National Survey of Employer-Sponsored Health Plans, over half the employers not offering coverage today said they'd rather offer benefits than pay penalties, if tax subsidies lowered their costs enough.
"The focus for many local employers now is on the coverage mandates that take effect soon, especially looking at how insurance carriers will respond," said Schilmeister.
Here is a brief look at how the health reform law will impact small businesses:
By 2014, states must set up Small Business Health Options Programs (SHOPs), which allow companies with fewer than 100 workers to pool their resources — and risks — to buy health insurance.
Until the SHOPs are established, businesses with 10 or fewer full-time workers earning less than $25,000 on average will be eligible for a 35 percent tax credit. Firms with up to 25 workers with an average salary up to $50,000 will receive partial credits while businesses with 25 or more workers will receive no credit.
Beginning in 2014, firms with more than 50 workers must offer health care coverage to employees or pay penalties of up to $2,000 per person for all but the first 30.