One of the key provisions of the Affordable Care Act passed in 2010 was something called a minimum Medical Loss Ratio (MLR) requirement. This requirement establishes a basic level of value for premiums. Insurers either meet that standard or, if they fail to, owe rebates to their customers.
If this requirement had been in effect in 2010, health insurance customers would have received rebates of almost $2 billion from insurers who failed to meet the value for premiums standard. That’s some serious money back in the pockets of small business owners who've paid too much for health care – and a serious incentive for insurers to hold premiums down and increase value in the future.
Predictably, these new requirements have come under attack by industry groups that want to roll them back and allow insurers to continue doing "business as usual." The latest attack is an attempt to remove agent and broker commissions and fees from the value for premiums calculation.
What would that mean for small businesses? This change would wipe out $1.2 billion – more than half – of the potential rebates in the 2010 estimates. And, it would undermine the incentive for insurers to hold premiums down going forward.
The Main Street Alliance submitted a letter to a task force of the National Association of Insurance Commissioners (NAIC) on June 28 outlining the small business case for protecting the value for premiums requirement and implementing the new minimum medical loss ratio standards without changes.
New research released today re-confirms two key points that small business owners who've been fighting for health care reform knew all along:
- First, that employer health coverage has been on the decline for the last decade, and small businesses have been feeling the squeeze more than anyone.
- And second, that provisions of the Affordable Care Act are going to bring health coverage within reach for a lot of small business owners who want to offer coverage but haven't been able to.
This second point is real good news for small businesses, and it comes in an Urban Institute report released today by the non-partisan Robert Wood Johnson Foundation (it's refreshing to see some real research after the circus show over the controversial McKinsey & Co. "study" that has been thoroughly debunked over the past week).
The Urban Institute study forecasts that insurance offer rates for firms with 100 or fewer employees will increase by nearly 10 percent thanks to the Affordable Care Act's health insurance exchanges and other insurance market reforms. Firms with fewer than 10 employees are expected to see the biggest jump - an increase of more than 14 percent. Talk about delivering big for small businesses!
Of course, many important decisions remain to be made about how states will set up their new insurance marketplaces, or exchanges. Main Street Alliance leaders are actively engaged in states from Maine to Oregon to promote exchanges that maximize on the opportunity to make quality, affordable health coverage available to all small businesses.
Small business owners demand to know if insurers are bankrolling new campaign to undermine health law
WASHINGTON, DC – Today, the U.S. Chamber of Commerce and allies announced their latest campaign to undermine the nation’s new health law by attacking one of the law's funding sources: a fee on health insurance companies. The Main Street Alliance released the following statement from David Borris, owner of Hel's Kitchen Catering in Northbrook, IL and a member of the Main Street Alliance executive committee, in response:
Health insurance companies are reporting the biggest profits in their industry's history, beating analysts' expectations by an average of 30 percent in the first quarter of 2011.(1) So let me get this straight: the U.S. Chamber and its allies are arguing to let insurance companies off the hook from paying their fair share to bring the small business benefits of the health law – things like rate review and a value for premiums requirement – to market? And they’re making that argument in our name, in the name of America's small businesses?
This looks like another case of small business identity theft – hiding behind small business arguments to defend big insurance profits, just like when health insurers secretly funneled $86 million to the U.S. Chamber in 2009 to fund attacks on health reform in the name of the business community. We'd like to know, are the insurance companies bankrolling this latest campaign, too?
(1) Reed Abelson, "Health Insurers Making Record Profits as Many Postpone Care," The New York Times, May 13, 2011, http://www.nytimes.com/2011/05/14/business/14health.html?emc=tnt&tntemail0=y
The country observed National Small Business Week in May (see the Presidential Proclamation). The Main Street Alliance marked the occasion by releasing its “State of the Small Business Nation – 2011.” This white paper includes a “Small Business Top Ten List” of concrete policy opportunities to level the playing field for small businesses and help them create jobs.
While pundits and politicians like to label policies “pro-business” or “anti-business,” as if there were one unified business interest, the reality is that policies that make winners out of some businesses make losers out of others. As Bruce Josten, the chief lobbyist of the U.S. Chamber of Commerce, put it, “You’re never going to have one hundred percent unanimity. Never. There is inherent tension… I laugh every day when someone calls and asks what does the business community think.” (1)
While Mr. Josten pointed to tensions between oil and gas companies, wholesalers and retailers, investment banks and retail banks – all big corporate players – his point applies even more so to the dynamics between big business and small business. While pundits and politicians like to lump all business interests together, the truth is that policies that benefit large corporate players very often tilt the playing field against small businesses.
In a cover letter to President Obama, senior administration officials, and congressional leaders on May 18, Main Street Alliance business leaders wrote:
Our members come from states across the country and a wide range of sectors, but we are united by a common set of values – small business values. We believe in what we do, we stand by our products and services, and we want people in government and corporate leadership who do the same. We stand for fair play and a level playing field. We stand for having each other’s backs. We believe America’s future prosperity depends on everyone contributing their fair share.
These small business values are what guide our business decisions and our commitment to advancing policies that fulfill the promise of an economy that works for all of us – small businesses, our employees, and the communities that sustain us.
(1) James Verini, “Show Him the Money,” Washington Monthly, July/August 2010, http://www.washingtonmonthly.com/features/2010/1007.verini.html
On March 30th, Main Street Alliance leader Rick Poore made the trek to Washington, DC from his business in Lincoln, Nebraska to testify at a hearing of the House Energy & Commerce Committee's Subcommittee on Health.
Rick discussed his support for the new health law. He told his story of steep annual rate increases - several times in excess of 30 percent - in the years before the passage of the health law. And he recounted how his current insurer does rating differently, spreading risk and costs more effectively across younger and older workers, and how he sees that as a microcosm of how the new health insurance exchanges will help small businesses by expanding risk pooling and spreading risk more effectively.
Rick's opening remarks from the hearing are pasted below:
Chairman Pitts, Ranking Member Pallone, and members of the Health Subcommittee,
Thank you for the invitation to testify today. My name is Rick Poore, and I own DesignWear, a screen printing business in Lincoln, Nebraska. I’m also a member of the Main Street Alliance small business network.
I’ve been a small business owner for 17 years. I started with 3 employees, and we’ve grown to employ 29 people.
I offer health insurance to my employees. It makes sense for morale and retention. But our rates have gone up every year – several times over 30 percent.
At the same time, our benefits were whittled away, in an effort to keep things affordable, until we had little more than a fig leaf left.
Two years ago, I switched to a new insurer. They do rating differently, spreading risk and costs more evenly, and it’s markedly cheaper for me overall. I see this as a microcosm of the new health insurance exchanges coming in 2014.
The country counts on small businesses to create jobs, but if you want to talk about a job-killer, look no further than runaway health insurance costs. Small businesses’ ability to create jobs has been seriously undermined by insurance costs more than doubling in 10 years.
We saw years of steep increases, with no tools to do anything about it. Without bargaining power, I had better odds from a midway carney than I did from my insurance company.
The Affordable Care Act is finally changing that, for the better.
The argument that the health law will cost our economy jobs ignores reality. It ignores the lessons of the last decade, where it was the lack of action by Congress to curb skyrocketing costs that left small businesses in the lurch.
The real threat to job creation is the threat of repealing the law and going back to a system that stacks the deck against us.
On the employer responsibility requirement, we’ve got to remember two facts. First, over 95 percent of our nation’s businesses have less than 50 workers and won’t be impacted. Second, 96 percent of businesses with more than 50 workers already offer coverage.
If some larger businesses complain that paying for health coverage will harm their ability to create jobs, remember that when they don’t pay, the rest of us pay their way for them, and that hurts our ability to create jobs. This is anti-competitive.
Imagine if my competition stopped paying wages and I was held responsible for making their payroll. It may sound crazy, but that’s effectively what we’re doing with cost shifting in health care.
Recent data from insurers in Nebraska, Kansas City, and national companies like UnitedHealth Group and Coventry show encouraging increases in small business coverage. ,
From the tax credits to stronger rate review and the value for premiums requirement, the health law is already helping small businesses offer coverage, save money, and plow those savings back into job creation. We’ll get even more help in 2014 when the insurance exchanges open.
I’m looking forward to broader risk pooling and bargaining power in a Nebraska insurance exchange.
There are 40,000 firms in Nebraska with less than 50 employees that could buy in the exchange, employing 230,000 people. Talk about increasing my bargaining power.
I know insurance lobbyists are trying to blame recent rate increases on the new law. But insurers find an excuse to raise rates every year. If they’re raising them again, it’s in spite of the law, not because of it.
Even insurance executives admit this: an executive in Massachusetts said recently that only one percentage point of his company’s increases this year was due to the new law.
Small business people are problem solvers. We wake up every day looking for a better way to do business. We take whatever pitch is thrown at us and do something with it.
Problem solving is what the American people send Representatives to Washington to do.
Here’s the thing about problem solving: most solutions aren’t perfect out of the box. But that’s no reason to scrap them. We make a start in the right direction and correct the course as needed.
Our country and our economy can’t afford to go back to a health system that stacks the deck against small businesses. We’ve got to move forward.
The other day I had to ask my wife when we actually started DesignWear – as a habit, I believe most entrepreneurs look mainly forward and rarely back. That’s what I’m asking you to do.
By moving forward, you can level the playing field for small businesses, allowing us to focus on creating jobs and building our local economies.
Every day until the end of the Congressional recess on September 8, MSA is featuring a real-life story of a small business owner impacted by the health care crisis here on our COUNTDOWN page. It’s our SMALL BUSINESS COUNTDOWN TO HEALTH CARE, and it’s part of our national STAND WITH SMALL BUSINESS initiative. MSA small business owners are calling on Members of Congress to stand with small business, not the insurance industry, and pass real health care reform when they head back to Washington DC on September 8.
DATE: SEPTEMBER 1
COUNTDOWN METER: DAY 7 - ONE WEEK TO END OF RECESS
STATE SPOTLIGHT: ILLINOIS
Radha Jaya Raghavan
Systems Integration Consultant
I’m a certified IT professional, and I recently started my own consulting business. As a self-employed person, my insurance premium has skyrocketed in recent years. Since November 2007, it’s gone up five times, with an overall premium spike of 55 percent to 60 percent.
The premium hikes all started when my doctor sent me for a test because of family medical history. I was then hit with a higher premium and an out-of-pocket expense to cover the cost of the test. Every time I called, they had a different story about what was covered and what was not. Eventually, I paid a lot of money out-of-pocket, because I was afraid that my credit history would be destroyed while they delayed payment.
My fear is that my insurance rates will keep rising, and I’m very unsure whether I’ll be able to maintain coverage. I’m afraid to go to my doctor for a check-up or get any routine exams done. I’m worried that I'd be giving the insurance company an opportunity to increase my premium yet again.
We need to have care and treatment that is easy to obtain, without having to mortgage one’s house or file for bankruptcy. The system should encourage entrepreneurs, not penalize them with confusion and higher insurance costs. That’s what health care reform means to me.