Shots - Health News
1:59 am
Thu October 3, 2013

Small Businesses May Find Insurance Relief In Exchanges

Originally published on Thu October 3, 2013 1:11 pm

Walk down the carpeted hallways of Westwind Media in Burbank, Calif., and it's common to hear the odd explosion, the hum of traffic or a burst of gunfire.

It's here in these edit bays that small feature films and TV dramas like the ABC hits Grey's Anatomy and Scandal and CBS's Person of Interest get primped and polished for prime-time viewing.

While about 45 employees work here to make Hollywood magic happen, general manager Sunder Ramani is focused on the less exotic work of paying the bills and figuring out how to provide health insurance to about 15 workers who don't have union-provided health coverage.

"Up until about two years ago, we had probably the Cadillac of plans for our employees," he says. "We picked up 100 percent of that plan, which was, I think, a huge tool in our arsenal in terms of getting good people to come work for us."

Double-digit premium increases in recent years have forced Ramani to downgrade his employee coverage, which his insurance broker has warned may soon soar another 25 to 35 percent above last year's increase.

"Which is a significant hit," Ramani says, "but they can't tell me enough yet until we get closer to that time. So I'm here in a limbo world trying to decide what it is I'm going to do."

One new option he'll soon have is to buy insurance through Covered California's SHOP exchange. SHOP stands for Small Business Health Options Program. It's California's version of a small-business insurance program that is part of the federal Affordable Care Act. The state has 500,000 small businesses.

All states are offering similar small-business exchanges. These are marketplaces for employers with 50 or fewer full-time workers and are designed to offer more affordable insurance to mom-and-pop businesses that have long paid more than large companies for the same level of coverage.

"Small businesses are horribly disadvantaged in terms of being able to purchase insurance," says Peter Harbage, president of the Sacramento-based health policy firm Harbage Consulting. "If they're even able to purchase it, they have to pay more and they get less."

Harbage says that not only will SHOP plans offer competitive prices, but they will also offer tax benefits that for some smaller companies might cut premium prices in half.

But John Kabateck is not so optimistic. He is the California executive director for the National Federation of Independent Business, and represents more than 22,000 small businesses in California.

"There are a lot of uncertainties as it relates to the law," he says. "We are hopeful that they will find affordable coverage within the exchange. We are hopeful they will have the ability to pick and choose in the marketplace."

Business owners will need to closely inspect the policies offered, Kabateck says, as some participating insurance companies have announced they're keeping premiums lower by offering a smaller network of doctors and hospitals. And that means fewer choices for employees.

And whether or not a small business opts to provide workers health coverage, there's really no way for them to avoid the extra time and cost it will take to navigate the new law's reporting requirements. And that's a concern shared by Westwind's Ramani.

"Small business doesn't have scale," Ramani says. "We don't have a legal department. We don't have an HR department. We navigate through mountains of regulations, not just about health care but about everything we do here. We're just getting bombarded on all levels."

For now, Ramani says he'll sit tight and watch before deciding whether the SHOP marketplace will provide him a better way to buy affordable, quality health insurance for his employees.

Under the Affordable Care Act, small businesses are not required to provide insurance to their workers. Only those with more than 50 employees must do so, beginning in 2015.

This story is part of a collaboration with NPR, KPCC and Kaiser Health News.

Copyright 2014 Southern California Public Radio. To see more, visit http://www.kpcc.org/.

Transcript

STEVE INSKEEP, HOST:

Now let's remember, even as the standoff continues, the healthcare law known as Obamacare remains in effect. The newly-opened health insurance exchanges, created by the Affordable Care Act, are offering a separate marketplace - the Small Business Health Options Program, SHOP. These so-called shop exchanges allow business owners with 50 or fewer full-time workers to buy health insurance for employees and maybe qualify for tax credits. For the next several weeks, we'll be bringing you stories about small businesses.

And this next installment comes from Stephanie O'Neill of member station KPCC. She reports on one business manager considering his options in California.

STEPHANIE O'NEILL, BYLINE: Walk down the carpeted hallways of Westwind Media in Burbank and it's not uncommon to hear the odd explosion.

(SOUNDBITE OF EXPLOSION)

O'NEILL: ...the hum of traffic, or an AK-47 submachine gun burst.

(SOUNDBITE OF GUNFIRE)

O'NEILL: It's here in these edit bays that small feature films and episodic television dramas like the ABC hits "Grey's Anatomy," "Scandal" and CBS's "Person of Interest" get primped and polished for prime time viewing.

(SOUNDBITE OF EXPLOSION)

O'NEILL: But while about 45 employees work here to make Hollywood magic happen, general manager Sunder Ramani is focused on the less exotic stuff, like paying the bills and how best to provide health insurance to about 15 workers who don't have union-provided health coverage.

SUNDER RAMANI: Up until about two years ago, we had probably the Cadillac of plans for our employees. We picked up 100 percent of that plan, which was, I think, a huge tool in our arsenal in terms of getting good people to come work for us.

O'NEILL: But double-digit premium increases in recent years have forced Ramani to downgrade his employee coverage, which his insurance broker has warned may this December soar another 25 to 35 percent above last year's increase.

RAMANI: Which is a significant hit, but they can't tell me enough yet until we get closer to that time. So I'm here in a limbo world trying to decide what it is I'm going to do.

O'NEILL: One new option he'll soon have is to buy insurance through Covered California's SHOP exchange. That's California's state-run marketplace that's now offering insurance to 500,000 small businesses statewide. Peter Lee is executive director of Covered California.

PETER LEE: At Covered California, we're going to give small businesses a way to buy better.

O'NEILL: Under the Affordable Care Act, small businesses are not required to provide insurance to their workers. Only those with more than 50 full time employees must do so, beginning in 2015. The SHOP marketplaces are designed to offer more affordable insurance to mom-and-pop businesses that have long paid more than large companies for the same insurance plans.

PETER HARBAGE: Today, small businesses are horribly disadvantaged in terms of being able to purchase insurance.

O'NEILL: That's Peter Harbage, president of health policy firm Harbage Consulting.

HARBAGE: If they're even able to purchase it, they have to pay more and they get less.

O'NEILL: Harbage is among those who believe Obamacare will benefit the nation's small companies. He says not only will SHOP plans offer competitive prices, they'll also offer tax benefits that for some smaller companies may cut premium prices in half. But John Kabateck is not so optimistic.

JOHN KABATECK: There are a lot of uncertainties as it relates to the law.

O'NEILL: Kabateck heads the National Federation of Independent Businesses in California, which represents more than 22,000 small businesses statewide.

KABATECK: We are hopeful that they will find affordable coverage within the exchange or otherwise. We are hopeful they will have the ability to pick and choose in the marketplace.

O'NEILL: But, Kabateck says, business owners will need to closely inspect the policies offered as some participating insurance companies have announced they're keeping premiums lower by offering a smaller network of doctors and hospitals. And that means fewer choices for employees.

What's more, he says, whether or not a small company opts to provide health coverage, there's really no way for them to avoid the cost and time it will take to navigate the new law's reporting requirements. That's a concern shared by Westwind's Sunder Ramani.

RAMANI: Small business doesn't have scale. We don't have a legal department. We don't have an HR department. We navigate through mountains of regulations, and not just about healthcare, about everything we do here. We're just getting bombarded.

O'NEILL: For now, Ramani says, he'll sit tight and watch before deciding whether the SHOP marketplace will provide him a better way to buy health insurance for his employees. For NPR News, I'm Stephanie O'Neill in Los Angeles.

INSKEEP: Her story is part of a collaboration with NPR, KPCC and Kaiser Health News. Transcript provided by NPR, Copyright NPR.

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