Your Bottom Line: What Health Reform Means For Rural

Illinois Small Businesses

Jessica Stone, Small Business MajorityJoyce Harant, Campaign for Better Health Care

Jon Bailey, Center for Rural Affairs

About Us• Small Business Majority – SBM is a small business advocacy group founded and run by

small business owners to focus on solving some of the biggest problems facing small businesses today.

• Campaign for Better Health Care – The Campaign for Better Health Care is a coalition of organizations and individuals, working to help create and advocate for an accessible, quality health care system that provides for all. We believe that accessible, affordable, quality health care is a basic human right for ALL people.

• Center for Rural Affairs – CFRA was established in 1973 and is a private, non-profit working to strengthen rural communities, create social and economic justice, support environmental stewardship, create genuine opportunity for all, and engage people in decisions that affect their lives and their communities.

Small businesses struggling with costs

Soaring cost of health insurance – especially for small businesses – 54% of businesses <10 employees don’t offer (Kaiser study)

28% self-employed: not covered

Small firms pay 18% more than large businesses

Our national study: Small business health costs will more than double over the next 10 years – $2.4 trillion total

Small businesses struggling with costsOur opinion surveys: 86% of small businesses don’t offer because of cost; 72% of those who do offer say they are struggling to do so

Key benefits of health reform for small businesses

• Establishes a competitive marketplace for small businesses and the self-employed

• Provides immediate tax credits for most small businesses ($40 billion in credits by 2019)

• Provides immediate access to a Preexisting Condition Insurance Plan for the self-employed

Health Insurance Exchanges

• Section 1311 of the Affordable Care Act• Every state must have a Health Insurance Exchange up

and running by January 1, 2014• Or … Feds will come into state and establish an Exchange• Up to 30 million Americans are expected to obtain

insurance through Exchanges – maybe 80 million if Medicaid and Children’s Health Insurance included

• Intended for individual and small group markets• No one knows what “Exchange” means, so now

commonly called “health insurance marketplace”

Health Insurance Exchanges

Minimum Requirements of Affordable Care Act• Exchange must be able to enroll individuals and small

businesses (up to 100 employees) in a user-friendly way• Exchange must be able to certify plans sold in the

Exchange meet standards outlined in the ACA• Consumer and public input• Transparent• Financially stable – must be self-financing by January 1,

2015 (federal grants up to then)

Health Insurance Exchanges

Principles for a Health Insurance ExchangeItems states should consider in developing an Exchange• Transparent and coordinated planning process• Governance and conflicts of interest – Exchange should

have a strong and independent board• Access – “No Wrong Door” structure• Navigators• Value for premium dollars – Exchange should take an

active role that plans sold in the Exchange provide good value and good service

Health Insurance Exchanges

Principles for a Health Insurance Exchange• Actively prevent adverse selection – avoid

healthy people outside exchange, less healthy in exchange

• Accountability and continued input

“Principles for a Nebraska Health Insurance Exchange,” CFRA and others, May 2011

Health Insurance Exchanges

Important Issues for Rural• Access – Conventional wisdom is that exchanges will be

web-based. Rural issues with telecommunications technology. Need for creative means for rural access beyond minimum requirements of ACA.

• Outreach and information – Outreach challenges in rural areas. ACA provides grants for public outreach (1311(i)). Grant programs should specifically address rural outreach initiatives.

• Make exchanges attractive to small businesses – Pooling with other small businesses and self-employed.

Health Insurance ExchangesState Progress• Exchanges prior to ACA – MA and UT• Exchanges established after ACA – WA, OR, CA, NV, CO, WV, VT, MD• Legislation with intent to establish exchange, creation of study panel –

WY, ND, MS, VA• Governor considering non-legislative options – MT, AR, IN, AL, GA• Exchange legislation failed – AK, AZ, OK, TX, MO, SC• Governor vetoed exchange legislation or said “No exchange” – NM, LA• ILLINOIS?Commonwealth Fund, “State Health Insurance Exchange Legislation: A

Progress Report,” June 16, 2011

Guiding Principles for Establishing an Illinois Competitive Marketplace for Small Businesses

Accessible • Insurance plans must have a range of costs to ensure

affordability.• Include provisions to help small businesses and their

employees understand how to enroll, compare plans, and obtain personal assistance, as through a toll free hotline.

• Is easy for small businesses, employees and providers to use and reduces paperwork

 

Guiding Principles for Establishing an Illinois Competitive Marketplace for Small Businesses

Quality • Must be a choice of several plans with different benefit

levels.• Small business must be represented on the Illinois

Marketplace Governing Board, along with a diverse mix of expertise related to health care.

• The Governing Board must be independent• Ensure ethnic, racial and cultural diversity in the

membership Governing Board. 

Guiding Principles for Establishing an Illinois Competitive Marketplace for Small Businesses

Contains Costs • Must have the same rules for plans inside and outside of

the competitive marketplace to ensure that risk sharing is fair for all.

• Governing Board and all procedures must be created to protect against Conflicts of Interest

• Transparency and consumer interests are fully integrated into the insurance marketplace, such as with a Small Business and Consumer Advisory Committee to the Governing Board.

Small business tax credits

• Available to small employers (businesses or tax-exempt) through new Form 8941,  available on www.irs.gov

• Takes effect immediately (tax year 2010)

• Which businesses are eligible? Fewer than 25 full-time employees Average annual wages <$50,000 Employer pays at least 50% of the

premium cost

Small business tax credits

Our report: More than 159,900 Illinois small businesses are eligible (76% of all IL businesses); 48,400 businesses eligible for the maximum credit

21%

24%

55%

Illinois Small Businesses Eligible for Premium Tax Credits in 2010

Non-eligible IL businessesEligible IL businessesMaximum Premium Tax CreditsSome Tax Credits

Small business tax credits

• Tax credits on a sliding scale: o Up to 35% of premium expenses for 2010–

13o Up to 50% of premium expenses for any

two years beginning 2014• Tax credits do not cover premium expenses of

owners or their families• Tax credits can not be claimed by the self-

employed• Still available for those who filled extensions

or as a correction to your 2010 taxes

Preexisting Condition Insurance Plan (formerly high-risk pools)

• Available to individuals -- incl. self-employed

• Takes effect immediately

• Eligibility: People who have been uninsured for six months and have been denied for a preexisting condition

• Plans = lower premiums due to federal funding ($5 billion over 5 years)

• Available until full implementation in 2014 (no gap in coverage)

• PCIP.gov

Other immediate benefits

• Grants for small employers that establish wellness programs ($10M now available)

• Simple cafeteria plan for small (<100) employers to offer tax-free benefits (2011)

• New innovations to bring down costs (2011)

• Increased access to care - community health centers (2011)

• Businesses with fewer than 50 workers – 96% of all businesses – are exempt from any requirement to offer insurance

Shared responsibility

• Implementation mostly left up to states – essential to have small business input

• Repeal is unlikely – many provisions popular• However, Congress is open to improving the law

o e.g. 1099 reporting requirement has been repealed

Next steps

• Law is not perfect, but small business owners can engage with policymakers to make it successful

CBHC Resources

Small Business Web page: http://www.cbhconline.org/infocenter/small-business/

Illinois Legislation:Competitive Market Place- Senate Bill 1729 : http://www.cbhconline.org/action/advocacy-day/

Insurance Rate Review- House Bill 1501: http://www.cbhconline.org/infocenter/rate-review/

Your Guide to Health Reform: http://www.cbhconline.org/infocenter/your-guide-to-health-care-reform/

Questions or More InformationJon BaileyCenter for Rural Affairs402-687-2100jonb@cfra.orghttp://www.cfra.org/policy/health-carehttp://files.cfra.org/pdf/Health-Insurance-Exchanges.pdf

Resources

• National HHS website: www.healthcare.gov

• Our website: www.smallbusinessmajority.org

o Webinars for your group!

o Detailed FAQ

o Tax credit calculator

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Contact us for more information.Phone: (866) 597-7431 Email: jstone@smallbusinessmajority.org