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Saturday, September 11, 2010

The Rise of Health Premium Costs and the New Health Care Law

There were widespread media reports this week that health insurance companies will raise rates due to the mandates in the "Patient Protection Affordable Care Act" (PPACA). SBE Council beieves this was to be expected (and what we warned lawmakers and the White House during debate of the legislation), and now we see that the costly dangers of the massive overhaul are quickly bearing down on the market. We also believe that it would be wise for Congress and the Administration to repeal PPACA sooner rather than later before widespread damage takes hold. The new law is already creating a mess for business and the insurance industory, and the so-called myths that the White House continues to excoriate are now becoming a reality with the plan's implementation.

As I said in a statement this week on the dramatic increases in health insurance premiums:

"Small businesses were promised that the new health care law would lower health insurance costs. But now we see that rates, on average, will climb anywhere from 1 percent to 9 percent. Policyholders in the individual and small group market are seeing costs spike as much as 20 percent or more. When businesses are forced to provide more expensive services, they are forced to jack up prices. The costs of the mandates in the new health care law are being passed down to business owners, and this is only the beginning. That is what we explained to the White House and those in Congress who supported the bill, but they remained deaf to the simple economic facts."

The latest news that health insurance companies will dramatically raise health insurance premiums comes right after the release of interim "grandfathering" rules issued by the Department of Health and Human Services (HHS) which show that most small businesses will lose the coverage they currently offer or provide. That is, they won't meet "grandfathering" status and will be forced to purchase new, more costly coverage. Even the HHS estimates that up to 80 percent of small firms will lose grandfathering status under PPACA.

So much for the promise that Americans can keep the insurance they currently have. In addition, the tax credit for small business is proving to be a flop because of its limited value and restrictive structure.

New efforts by the Administration are underway to once again explain the benefits of PPACA to those of us who just don't see them, but the reality of the law's impact is undermining their message campaign. The bill is proving to be a disaster for small business. The sooner President Obama and the Administration wake up to this reality, the sooner we can stop the law's most damaging measures from taking effect.

Karen Kerrigan, President & CEO

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