Health system reform may help doctors' offices offer coverage

Findings by two studies run counter to opponents' contentions that the national health reform law would harm small businesses.

By Victoria Stagg Elliott — Posted Sept. 13, 2010

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Two recently published papers suggest that newly implemented health insurance tax credits and soon-to-be-created exchanges will make it more likely that small businesses -- such as physicians' offices -- will be able to offer employees health insurance and make it less onerous to keep doing so.

These conclusions, reached in separate reports by the Commonwealth Fund and the RAND Corp., run counter to health care reform opponents' contentions that the Patient Protection and Affordable Care Act would hurt small businesses. In its blog, the White House touted the results of both studies.

About 16.6 million people work for small businesses that are eligible for health insurance tax credits, according to "Realizing Health Reform's Potential: Small Businesses and the Affordable Care Act of 2010," released Sept. 2 by the Commonwealth Fund. Of this number, 3.4 million work in businesses that are projected to take advantage of the health insurance tax credit by 2013.

Experts say the companies most likely to use the tax credits are those that already offer health insurance. However, this also may be enough of an incentive for other companies to start doing so.

"This is tax relief for small businesses that offer health insurance. It is economic stimulus that will help small businesses get through these rough economic times," said Commonwealth Fund President Karen Davis, PhD, during a Sept. 1 conference call releasing a report on the issue.

Companies that employ fewer than 25 full-time-equivalents with average salaries of less than $50,000 -- and that pay at least half of individual coverage costs -- can take a tax credit of up to 35% of their share of the premiums paid since the beginning of the year. The credit increases to 50% in 2014. A physician-owner's salary is not worked into these calculations, but the wages of physician employees are.

Helping small businesses offer health insurance is considered particularly important, because these companies are less likely to offer employees health insurance. Higher administrative expenses make per-employee health insurance more costly than plans at larger companies.

Numbers from small-business organizations that oppose the health system reform law question whether many companies will benefit. The National Federation of Independent Business asserted in a July 20 release that a minority of businesses will be eligible for the tax credits and that the reporting requirements are so onerous many will choose not to participate.

The NFIB, a small-business trade group, has joined a federal lawsuit by 20 state attorneys general seeking to overturn the health system reform law.

Another study by RAND Corp. researchers in The New England Journal of Medicine on Sept. 1 used a simulation model to determine the impact of the insurance exchanges that will be available for small firms within the next year to access health insurance for employees.

Researchers predict that the number of workers offered coverage will increase from 115.1 million, or 84.6% of all workers, to 128.7 million, or 94.6%. The authors suggest that this will be driven by more small businesses being able to offer coverage.

In addition, workers will demand coverage in response to individual penalties for being uninsured. Three out of four workers offered health insurance by a company with fewer than 50 employees most likely will obtain coverage through an insurance exchange.

According to the Kaiser Family Foundation, 98% of companies with more than 200 workers offered health insurance in 2009, but this was true for only 46% of businesses with three to nine employees. In 2000, 99% of large companies offered health insurance, but only 57% of small ones did. These numbers are not broken down by type of business.

A 2010 Salary Survey by the Professional Assn. of Health Care Office Management found that 91% of physician practices provided employees with health insurance. Practices participating in the survey had an average of 23.2 employees, not including physicians.

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External links

"Realizing Health Reform's Potential: Small Businesses and the Affordable Care Act of 2010," Commonwealth Fund, Sept. 2 (link)

"The Effects of the Affordable Care Act on Workers' Health Insurance Coverage," The New England Journal of Medicine, Sept. 1 (link)

"Two New Studies: Health Reform Benefits Small Business," The White House blog, Sept. 2 (link)

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