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

Small business fighting to keep the insurance they have

…the fallout and unintended consequences of ObamaCare continue...

In campaigning to pass health care overhaul earlier in the year, President Barack Obama promised Americans they would be able to keep the insurance they currently have under his plan. But that promise is beginning to fall short as new rules stemming from passage of the Patient Protection & Affordable Care Act (PPACA) put 1.4million workers at risk of losing their health coverage as early as this September.

U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius can help on this front by making an exception for “Limited Benefit Medical” (Mini-Med) plans. If not, these critical health plans may cease to exist for 1.4 million workers covered by this option.

Why? Under the annual dollar limit provisions of PPACA that govern group plans (taking effect for plan years beginning September 23, 2010) these health plans will not meet the new standards established by the law. (Beginning in 2014, annual dollar limits are fully prohibited under the new health care law.) The question is, will HHS Secretary Sebelius make an exception for these plans – at least as a temporary solution, or allow 1.4 million workers to immediately lose health coverage?

On May 28, SBE Council President & CEO Karen Kerrigan sent a letter to HHS Secretary Kathleen Sebelius and U.S. Department of Labor Secretary Hilda Solis requesting that HHS quickly act to make an exception and allow these plans to stand.

As Kerrigan noted in her letter: “Small to mid-size employers use these affordable plans for full or part-time hourly employees, those who work on a seasonal basis or may be fulfilling a waiting period for an employer's regular health plan. While termed ‘limited,’ such benefit plans are coveted by those who use them because they affordably cover most medical issues. They serve an important purpose in the market, and without these plans many workers would not have access to health coverage.”

Removing the annual dollar limits from these plans will drive costs significantly higher for small to mid-size employers, which means most will be forced to drop health coverage all together for the workers covered by the limited-benefit plans. “It would be ironic indeed if 1.4 million workers lose health insurance as a result of a law that was intended to provide coverage to more Americans. But that will be the unintended consequence of PPACA unless HHS makes an exception for these plans, or clarifies the law,” wrote Kerrigan.

As of June 9, SBE Council has not received word back from HHS or DoL about its concerns.

The clock is ticking, and employers need to make decisions. Businesses have a sense of urgency in terms of moving to next steps to try to find alternative coverage or solutions for their employees, but the federal government remains dead silent on the issue. Quite frankly, we remain shocked that HHS is not acting more quickly to preserve health coverage for 1.4 million workers.

On another note, SBE Council recently launched PROTECT HSAs…and preserve health care choices, a project dedicated to making sure health savings accounts (HSAs) remain a viable health coverage option. PPACA threatens HSA viability, and SBE Council is working to make sure that the new regulations governing “acceptable coverage” and “medical loss ratios” do not destroy the affordable, flexible and popular HSA option. Please visit: www.protecthsas.org.

Kerrigan Statement on Passage of Health Care Bill

Small Business Advocate Statement on House Health Care Vote

Karen Kerrigan, President & CEO, Small Business & Entrepreneurship Council (SBE Council) issued the following statement regarding passage of the health care bill.

"The health care bill that President Obama will sign into law is not one that will help small businesses. Supporters of the bill, including the President himself, erroneously claim that small businesses will be helped by the legislation. Such statements are pure fantasy.

"The legislation will burden small business owners with crushing taxes and costs. It will not lower the cost of health coverage. It will kill jobs. It imposes a new mandate on the self-employed to purchase government-approved coverage whether they can afford to or not. Alongside its costly employer mandates and new regulatory burdens, it is fiscally irresponsible. Small business owners got tiny scraps from this legislation, which in no way make up for the crushing taxes and burdens they will face if the bill is fully implemented.

"Small business owners will be looking for political leadership and opportunities to rescind the legislation's harmful measures. We look forward to working with our small business allies in efforts to reverse this massive legislative mistake while moving forward with the common sense reforms that entrepreneurs have long advocated."