Small Businesses May Find Relief In Health Insurance Exchanges Designed For Them

BURBANK, CALIFORNIA — Walk down the carpeted hallways of Westwind Media here 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 episodic television dramas like Grey’s Anatomy,Scandal and Person of Interest get primped and polished for prime-time viewing.

Small Businesses May Find Relief In Health Insurance Exchanges Designed For Them

But 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 insurance to about 15 employees 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, the Small Business Health Options Program. It’s California’s version of a small-business insurance exchange that is part of the federal Affordable Care Act.

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 had to pay more than large companies for the same level of coverage.

“At Covered California we’re going to give small businesses a way to buy better,” according to Peter Lee, executive director of Covered California. The state has 500,000 small businesses.

Peter Harbage, president of the Sacramento-based health policy firm Harbage Consulting, thinks Obamacare will benefit the nation’s small companies.

“Today, small businesses are horribly disadvantaged in terms of being able to purchase insurance,” he said. “If they’re even able to purchase it, they have to pay more and they get less.”

He thinks not only will SHOP plans have competitive prices, they will also offer tax benefits that for some smaller companies may cut premium prices in half. 

‘A Lot Of Uncertainties?’

But John Kabateck is not so optimistic. He heads the National Federation of Independent businesses, which represents more than 22,000 small businesses statewide

“There are a lot of uncertainties as it relates to the law,” he said. “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.”

But he thinks 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 consumers.

And what’s more, he notes, 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’ll take to navigate the new law’s reporting requirements. 

That’s a concern shared by Westwind’s Sunder 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, not just about health care but about everything we do here. We’re just getting bombarded on all levels,” he said.

For now Ramani will 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 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 partnership that includes NPR, Southern California Public Radio, and Kaiser Health News.