San Francisco small business owner Janet Hildreth can rattle off an impressive list of numbers when it comes to health insurance.
14 to 20 – The percent her premium has risen every year over the past several years.
$2,500 to $4,500 – The maximum out-of-pocket increase her full-time employees at Tree Lovers Floors Inc. must pay before their medical bills are covered.
80 – the number of hours she spent researching a new insurance plan when she learned her premium this year would jump another 14 percent. In the end Hildreth stuck with her old plan that is now more expensive.
$24,000 – The amount Hildreth spends each year on 10 employees for health insurance.
But the most significant number for Hildreth is three.
In three years, many of the provisions in the new federal healthcare reform law will kick in and make the onerous insurance figures that have become a mainstay of doing business a thing of the past. For Hildreth, 2014 can’t get here soon enough.
One of the provisions of reform Hildreth is eagerly awaiting is the creation of a state health insurance exchange. The health insurance exchange is the single most important component of reform for small businesses. It will be the primary vehicle for making healthcare affordable and accessible for California’s 570,000 small businesses and their employees, as well as the state’s 2.7 million self-employed entrepreneurs.
The California Legislature is expected to cast final votes on bills establishing the state’s exchange in the next couple weeks. The passage of these bills is essential to ensuring that federal healthcare reform is successful, and crucial to getting California’s small businesses relief from the high cost of health insurance. Small businesses pay 18 percent more for healthcare than large companies, and usually receive fewer comprehensive benefits. But for many small businesses, the cost is just too high. In California, 60 percent of the uninsured are employed. Four million workers in our state don’t have health insurance, and more than half of them work for companies with fewer than 20 employees. The situation is even worse for the self-employed: one in three are uninsured, nearly twice the rate of the population as a whole.
An exchange will allow small businesses to band together to purchase insurance, giving them the type of clout that large businesses enjoy when negotiating for coverage. In California, 3.76 million small business employees and their dependents, and 840,000 self-employed people, will be eligible to purchase insurance through the exchange. These large pools will create maximum competition that improves quality, reduces premium volatility, increases choice and lowers costs.
What’s more, Small Business Majority conducted opinion polling of 700 California small business owners and found that this is exactly what they want; 81 percent said they support the creation of a health insurance exchange from which they could choose coverage from competing health plans.
But in order to get our small business owners what they need to survive and thrive, it’s imperative that the exchange’s framework be established now to allow adequate time for the state to ensure it’s implemented correctly and that it’s active, robust and sustainable. While there are still many details to work out, the bills legislators will be voting on before the end of the month get this critical process rolling and allow legislators the flexibility to fine-tune important details over the next few years.
Small businesses in California are struggling just to keep their doors open and the fact of the matter is that people like Hildreth are the minority. Most small businesses don’t have an extra 80 hours to spend on finding an insurance plan they can afford. In fact, most don’t even have the ability to offer their employees insurance in the first place. A successful exchange will change that. We hope our state legislators do the right thing for California small businesses and create the foundation for the exchange now.
Small businesses cannot afford to wait any longer.
Scott Hauge is the president of the Small Business California. John Arensmeyer is the founder and CEO of Small Business Majority.