Countdown to Reform?

While the rush continues for  Congress to deliver a cohesive healthcare reform bill, small business owners continue to struggle with limited insurance options and high costs.

For such owners, the goals for any reform remain consistent: affordable insurance and equal competition in the marketplace (see “Insurance Lapse,” September 2009). ReShonda Young, operations manager for Alpha Express Inc., a 34-employee courier service based in Waterloo, Iowa, agrees, but with conditions. “It’s hoping for greater regulations of the insurance industry, cutting out the pre-existing condition exclusions and transparency,” says Young, who runs the business with her brother Raymond Robinson and their father Levorn. “We want to see what we are paying for and why.”

This past year, Alpha Express generated revenues of $1.7 million. Young says it was also the first time in nearly nine years that the company could afford to offer coverage, which it does through Assurance Health Care. The cost to insure employees reached $7,000 monthly; Alpha Express and its staff split the cost of monthly premiums 75/25.

Currently, just 38% of small businesses offer employee insurance, down from 67% in 1995, according to the National Small Business Association.

“Small business owners are being forced to make some pretty impossible decisions,” says Sam Blair, national director for the Main Street Alliance, an organization that works with small businesses to advocate for healthcare. “They are being forced to cut back on coverage, put more of the cost on their employees, and increase deductibles.” Even after scaling back, owners still face a 10% to 20% increase in premiums, notes Blair. “This only makes it harder for small business to do its part for economic recovery–create jobs and stimulate the economy.”

Under the proposed reform, small business owners will receive a two-year tax credit to help cover costs. Two other provisions are the health insurance exchange and employer mandate.

The House proposes an exchange so small businesses can shop around for affordable insurance plans. “It’s unacceptable to be forced to renegotiate healthcare contracts for employees every year under increasingly difficult circumstances,” says Rep. James Clyburn (D-S.C.). “Congressional leaders are committed to passing healthcare reform because the current status is unacceptable.” The Senate proposes a Small Business Health Options Program, or SHOP, where small firms can pool together to enhance their choice of plans and increase their buying power against large insurance companies.

Under the mandate, the House will require employers to pay 72.5% of the premium costs for single coverage and 65% for family coverage. Noncompliance will result in a penalty of 2% to 8% for a payroll up to $750,000. Payrolls of $500,000 and under will be exempt. The Senate will require employers to offer coverage and pay 60% of the premium or pay a penalty of $750 for each uninsured full-time employee. Employers with fewer than 25 employees are exempt. However, 63% of employers oppose the mandate, according to a survey of 1,100 employers by Aon Consulting, a global provider of risk management services and human capital consulting.

While waiting for reform, Young continues to look for other health insurance companies. She says, “We know we are not in the best plan for our people but it’s a start. And we just have to keep searching.”

This article originally appeared in the April 2010 issue of Black Enterprise magazine.