In part two of Black Enterprise Editor-In-Chief Derek T. Dingle’s exclusive interview with Kathleen Sebelius, the Health and Human Services secretary, discusses how President Barack Obama’s push for healthcare reform would affect small business and healthcare disparities in African American communities.
Black Enterprise: With 40% of small business costs going to healthcare insurance, why would Obama’s plan be beneficial for small business?
Kathleen Sebelius: I’m a believer that small business owners really have the most to gain. They are, as you say, really at risk in the current system. Often with a small number of employees, if one employee has a pre-existing condition, if one is a cancer survivor or has a health condition, their rates skyrocket. And year in and year out, they’ve seen 15%, 20%, 25% increases. It not only hurts the bottom line but I keep talking to business owners who say it also hurts their ability to retain and keep good employees. Because they offer less and less in terms of benefits, employees will go down the street, down the block or across town for health insurance benefits. So they lose employees and don’t make as much money. They’re really at the mercy of private insurers. They’re paying two or three times as much as a large employer for exactly the same benefits. And this [new] system would offer them an affordable option. It would also have tax incentives for small business owners to come into the market and offer employees coverage. If the small business owners have low-income employees, they would be able to put a plan together in which those employees would actually get a subsidy to be able to take up the plan. Often, they may offer a plan but if you’re making just above minimum wage, you may not be able to take up the plan. So there are a whole series of strategies – a better, bigger marketplace, new rules for insurance companies, tax incentives on the employer side, help on the employee side – that would make the current situation, which is breaking their budgets and payrolls, much different as we look forward.
An aspect of the plan is that certain small businesses will be exempt from the employer mandate. What are the requirements for exemption and what are the options for those small businesses to get insurance?
Well, first of all the options are really the new health insurance exchange which would put the small business owners in a much larger pool. I’m a former insurance commissioner and one of the rules of insurance is the larger the group the more negotiating power you have. So if you and your spouse are negotiating on behalf of yourselves and two or three employees, you’re at the mercy of the insurance company. If on the other hand you’re one of a 50,000-person group, you got a whole different leverage power. Providers, hospital systems, doctors, pharmacies are willing to give discounts for numbers. You send me 50,000 clients and I’ll give you a good deal on the various rates. So the new health insurance exchange would negotiate that on behalf of small business owners; they’d be able to pick and choose from a variety of products, hopefully including a public option but private competitive plans. They’d be in a very different situation. Insurance companies would not be able to dump them out of the market if somebody got sick. To not offer coverage the next year if there is a health condition. To charge older employees four, five, six or seven times as much as younger employees. All that would cease to exist with the new rules.