My husband owns an architectural services firm, and we can’t wait for January 2014. That’s when his and other small D.C. businesses will finally have the opportunity to purchase affordable and comprehensive health insurance for their workers in a competitive and functional market. I support decisions made this month by the D.C. officials who are charged with implementing federal health-care reform — so-called Obamacare — to make this a reality.
The District’s current health-insurance market is a failure for small businesses and their employees. Because they lack purchasing power, small businesses have to pay higher premiums for plans with higher out-of-pocket costs and fewer covered benefits than larger organizations or government get. That creates a disincentive to work for small businesses, which makes it tougher for them to compete for workers and doesn’t serve our local economy well, either.
The scare tactics you may be hearing about the District’s plan are just that. Some interests mischaracterize what a functioning health-insurance market can do for individuals and small groups. In fact, the District’s health-insurance exchange could serve more than 150,000 people who currently have insurance through individual or small group plans. This critical mass is essential: Otherwise, small businesses with fewer than 50 employees will continue to be denied access to better-quality health-care options. Scaremongers also fail to mention that, under the law, small businesses can “grandfather in” long-standing insurance plans and are exempt from the employer mandate to offer insurance.
Another benefit of the combined risk pool is that it will reduce wide variations in the cost and covered benefits from one employer to another. Small businesses will also gain, at long last, the purchasing power currently reserved for larger businesses. Additionally, D.C. regulators will set minimum-quality standards for all insurance products sold on the exchange — such as providing an adequate number of doctors and offering plans that meet higher levels of need — so we can all count on an expected level of care.
Since founding his architectural services firm in 2002, my husband’s business has offered and paid the premiums for his employees’ health insurance. Ten years ago, it was still possible to offer employees an affordable choice, including preferred-provider or managed-care plans. But it’s not anymore. Premiums have increased dramatically and unpredictably from year to year, even as benefit coverage has declined. Access to care has become more of an issue as the number of in-network providers shrinks.
Fast-forward to 2012. For the past six years (long before enactment of health reform), our premiums have risen by an average of 22 percent annually. Coverage for a family of four exceeds $1,500 per month, even for a plan with a $5,000 deductible. Faced with these costs, we confront an unsavory reality: Financially, it may make sense to throw in the towel and stop offering employer-sponsored insurance. But despite the tremendous costs to their bottom lines, small firms like my husband’s often try hard to continue to provide insurance to prevent any employees from being denied coverage.
Denial of coverage doesn’t happen to larger businesses and certainly not government employers. Under current law, their employees cannot be denied coverage through individual underwriting. Plus, large organizations have the purchasing power to shop among competing carriers and negotiate more favorable rates. That purchasing power bears no relationship to the health of their employees. Does working for a larger organization mean that an employee is healthier? Certainly not.
The D.C. small-business community has earned the right to purchase health insurance in the more competitive, transparent and vibrant market made possible by the District’s health-insurance exchange. With access to the purchasing power of a competitive health-insurance market and a combined-risk pool, small businesses and their workers will be able to focus their resources in productive pursuit of their core corporate and individual missions.
Access to more competitive benefits also helps small businesses compete for labor and improve their bottom lines. Workers also stand to benefit. With less variability in the premiums and out-of-pocket expenses of the plans offered from one firm to another, workers will have greater job mobility. They will be able to take the job they want with a small business instead of the benefits they need from a big one.
The writer is general counsel for AFrame Digital, a health information-technology company. Her husband, Merle Thorpe, is the principal of Merle Thorpe Architects.