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The Breaking Point  Why health care reform is crucial to small business

The Breaking Point  Why health care reform is crucial to small business. By: Todd O. McCracken, President. Why Does Small Business Matter?. Small Firms: Represent 99.7 percent of all employer firms Employ half of all private sector employees

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The Breaking Point  Why health care reform is crucial to small business

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  1. The Breaking Point  Why health care reform is crucial to small business By: Todd O. McCracken, President

  2. Why Does Small Business Matter? • Small Firms: • Represent 99.7 percent of all employer firms • Employ half of all private sector employees • Create between 60 to 80 percent of all net new jobs • Produce 13 to 14 times more patents per employee than large firms • The small business share of employment remains around 50 percent • 78 percent of small businesses have fewer than 10 employees • 61 percent of small businesses are micro-businesses with fewer than 4 employees

  3. Total Premium Increase Compared Against Other Economic Indicators 2000 - 2006 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2006

  4. Annual Premium Increase Compared Against Other Economic Indicators 2000 - 2006 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2006

  5. Annual Premium Increase by Employer Size Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2006 *2000- 2003 data uses firm size of 3 to 9, 2004-2006 reports consolidated very small businesses to 3-24 workers

  6. Comparison of Premium Increases by Employer Size Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2000-2006 *2001 and 2003 data uses firm size of 3 to 9, 2005 and 2006 reports did not distinguish between 3 and 24 employees.

  7. Percentage of Businesses Offering Health Benefits by Firm Size Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 1999-2006; KPMG Survey of Employer-Sponsored Health Benefits, 1996.

  8. Overall Percentage of Firms Offering Health Benefits, 2000 - 2006 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2006

  9. Percentage of Firms Offering Health Benefits, by Firm Size in 2006 Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005

  10. Percentage of Businesses Offering More than One Health Plan Option by Firm Size

  11. Percentage of Small Employers Considering Changes to Employee Health Plans Source: NSBA Member Survey, October 2005

  12. Source: Kaiser/HRET Survey of Employer-Sponsored Health Benefits, 2005

  13. Expected Changes to Employee Insurance Plans Source: NSBA Member Survey, October 2005

  14. Percentage of Employee Premium Paid for by Employer Source: NSBA Member Survey, October 2005

  15. Employee Premium Cost-Sharing Trend Small vs Large Business Source:Hewitt Associates, US Bureau of Labor Statistics

  16. Allowable State Variations Within a Particular Plan Source: National Association of Insurance Commissioners

  17. Piecemeal Solutions:Why They Won’t Work • Association Health Plans (AHPs) • Attempt to provide cost-cutting by allowing trade-associations to create a national pool for their members under a new set of federal rules • Would create adverse selection and segment the market due to AHP’s ability to skim off the healthiest individuals. • Small Employer Health Benefit Plans (SEHPB) • Patterned after federal employees’ health plan, SEHPBs would establish a federally-run insurance pool for small businesses • Would create adverse selection on part of the SEHPB due to a rich benefit package, guarantee issue and government subsidies on the plan • Enzi Health Care Proposal • Would allow for limited AHPs with state oversight and preempt certain states’ rating rules • Best of all three initiatives, but doesn’t go far enough in creating broad reform and enhancing consumer involvement

  18. NSBA Health Care Proposal • Individual Responsibility • All individuals would be required to obtain coverage providing for the spreading of risk with all individuals in the insurance pool. • Broad Reform of the Insurance Market • Establishment of a federally-defined basic minimum package that is truly basic in nature • Actuairily-determined rate bands established within which insurance companies could price their products • Insurance companies would operate under a guarantee issue system • States would retain oversight and authority over all plans under the federal framework • Provide Subsidies for Low- Income • Individuals and families would receive federal financial assistance for health premiums, based upon income • Reshape Health Insurance Tax Incentives • Tax parity for all purchase of health insurance, whether purchased through an employer or individually • Cap tax-preference on health expenditures at the premium level for the required package • Reduce Costs and Improve Quality • Instituting increased consumerism requires ample information be available to consumers • Increased IT in health care through electronic medical records and procedures to both reduce errors and increase efficiency • Pay-for-Performance based on actual health outcomes and standards established through evidence-based indicators and protocols

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