The Small Business Solution

How to Make Health Care More Affordable for Small Businesses

Last fall, NHPIRG researchers went door to door, and interviewed over 200 small business owners about their health care concerns. Small business owners answered an anonymous survey and were invited to share their related experiences.

NHPIRG Education Fund

 

Most small business owners in New Hampshire would like to offer health care to their employees but have been priced out of the option. Often small business owners cannot afford to cover even themselves. Many of them have been forced to choose between keeping their business open and offering health insurance benefits, while their employees have been forced to choose between keeping their job working for a locally owned shop and finding employment which offers coverage.

 Only when small businesses, independent contractors, sole proprietors and individuals are able to obtain coverage and attain the personal economic stability that comes with having health insurance without abandoning their business ventures will New Hampshire meet our economic potential. Health care reform in the Granite State must create a marketplace which offers affordable plans for small groups and individuals, and can do by advancing two key policies: setting up a pro-consumer health care exchange, and creating a strong, transparent process for reviewing premium increases. 

Exchanges 

State health care exchanges are marketplaces of insurance products, virtual stores where consumers can compare and purchase health insurance plans. An exchange makes health care better and more affordable for small businesses, micro businesses, and individuals through the implementation of such a marketplace. If exchanges are constructed and governed in consumer friendly ways, they can level the playing field. Health care exchanges may pool together the buying power of small businesses and individuals, and negotiate for better rates on behalf of the group. This type of exchange is sometimes called an “active purchaser” model, but “active negotiator” is a more accurate description. 

Health care exchanges which follow the active negotiator or active purchaser model can make rates and products which have until now been available only to big companies and their employees, available to small businesses and individuals. For this reason, it is critical that the state health care exchange is consumer- run, rather than being dominated by representatives of the insurance industry. 

Rate Review 

Small business owners have seen their premiums and deductibles skyrocket in recent years, even though proposed rate hikes from insurance carriers are submitted to the Department of Insurance, and the Department has the option of rejecting those proposals. The rate review process isn’t transparent to New Hampshire consumers but it should be.

The State should improve and modernize its databases which tracks rate hikes imposed on consumers and enable a forum for continuous public input. The state health care exchange should also play a role the rate review process. The exchange should have the authority to reject unreasonable rate increases for products sold in the exchange.

 And again, for it to play a positive role in rate review, the exchange’s governance board must be free of industry influence. 

Survey Results 

Last fall, NHPIRG researchers went door to door, and interviewed over 200 small business owners about their health care concerns. Small business owners answered an anonymous survey and were invited to share their related experiences.

Fewer than 25% of small business owners we surveyed offer coverage to employees through their businesses, including to themselves. 

Our efforts revealed that Granite State small business owners overwhelmingly believe that the rising cost of health insurance has negatively impacted New Hampshire’s economic growth. Almost 80% of Granite State small business owners say that the high cost of health care coverage has hurt New Hampshire’s overall economy and business community.

We asked if the state exchange should have the authority to reject unjustified rate hikes by insurance companies, and the authority to require insurers to offer more cost-effective products in our state. 73% said “yes” and only 8% said “no.” 

The vast majority of business owners we surveyed favor state action to reform and improve health care options for individuals and small businesses.

We found that 83% of small business owners would support a state health care exchange that pools the buying power of individuals and small businesses to negotiate with insurance carriers and secure lower rates on behalf of the group.

 Only 3% of small business owners polled do not want the state to take action to create an active purchaser exchange. Thirteen percent of small business owners say they don’t know. 

Though small businesses are the backbone of our economy in New Hampshire, only 11% of small business owners surveyed believe that their interests are represented in the health care debate in Concord.

 Key Recommendations 

➤➤Legislators should form a strong state health care exchange which pools the buying and negotiating power of individuals and small businesses.

 ➤➤The exchange must be run by and for businesses and consumers. 

➤➤New Hampshire’s rate review process should be more transparent. 

➤➤The consumer-run state exchange should have rate review authority which allows the group to reject unjustified rate hikes proposed by carriers. 

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