U.S. Small Business Administration Health Insurance Reform Small Business Briefing Text version Slide 1 This is about health insurance reform. On March 23rd, the President signed health reform into law. Welcome to SBA’s small business health care reform briefing. Jim O’Connor April 3, 2010 Slide 2 For decades, access to affordable health care has been a major concern for small business owners. Health insurance reform is a significant step forward for the nation and the small business community. This briefing describes the six key ways health reform will help small businesses. Slide 3 America’s small businesses have struggled with the cost of employee health care – which over the years has skyrocketed. Premiums for employer-based health insurance have more than doubled since the year 2000.  Historically, small firms have been disproportionately burdened by the financial strains caused by rising health care costs. On average, small firms pay up to 18 percent more than large firms for the same health insurance policy. Reform is critical. The new health law establishes small business tax credits; creates health insurance exchanges; ends price discrimination against small businesses; promotes entrepreneurship through health care security; reduces the hidden tax on small business employees with health insurance; and, reduces premiums for small businesses. Slide 4 A key component of health care reform -- provides tax credits to small businesses. This helps them afford the cost of covering their workers with a health insurance plan. The tax credit is effective immediately. It can cover up to 35 percent of the premiums a small business pays to cover its workers. In 2014 the tax credit rate will increase to 50 percent. For-profit small businesses and not-for-profit small businesses and organizations are eligible for the tax credits. The Congressional Budget Office estimates that the new tax credit will save small businesses some $40 billion over the next ten years. Slide 5 Currently, small businesses face not only higher premiums than large businesses, but also face higher administrative costs to set up and maintain a health plan. They are also at a disadvantage in negotiating with insurance companies because they lack bargaining power. Health reform will change this dynamic. Starting by 2014, firms with 100 or less workers will be able to pool their buying power and reduce administrative costs by purchasing insurance through a small business health insurance exchange. This will give small firms greater leverage and more options. Slide 6 In the present health insurance system, small businesses can see their premiums skyrocket if just one or two workers fall ill and accumulate high medical costs.  Health insurance reform will prevent insurance discrimination based on health status. Starting in 2014, community rating rules will prohibit a small business from being unfairly penalized if one or several of its workers become seriously ill. This is a significant step forward. Slide 7 Health care security promotes entrepreneurship. The current health care system inhibits entrepreneurship and small business formation by locking workers – especially those with families -- or with any sort of health problems – into jobs at larger firms that offer family coverage and have a big enough risk pool to absorb the cost of covering pre-existing conditions. This “job-lock” causes many workers to stay at large firms, even if they would be more productive working at a small business or becoming self-employed. By providing health security for every American and eliminating exclusions for pre-existing conditions and price discrimination against those who are sick, health reform will make it easier for small businesses to attract the best workers and easier for those with an entrepreneurial spirit to start a business. Slide 8 Health care premiums are currently high, in part because of a hidden insurance tax that covers the cost of care for those without insurance. It is estimated that this hidden tax adds over $1,000 to every health care plan. Health reform will significantly reduce this tax by adding health care coverage to an additional 32 million Americans by the year 2019. Slide 9 The bottom line ---- health reform will lower costs for small businesses, making coverage for employees more affordable. Slide 10 There is much to learn about health insurance reform. Staying informed is critical. This is one of the most important issues facing all Americans – and, all small businesses. Use the resources identified here or visit one of our district offices, or resource partners to learn more about health reform. The SBA Website – noted here – will provide quick access to all of our offices and partners. Health Reform (the Website) http://www.healthreform.gov/ Fact Sheet: Small Business Health Care Tax Credit http://www.whitehouse.gov/healthreform/small-business/tax-credit Tax Credit Case Studies (examples) http://www.whitehouse.gov/healthreform/small-business/tax-credit/cases SBA (helping small businesses) http://www.sba.gov/ Slide 11 Thank you for participating in this briefing.