HHS Secretary Kathleen Sebelius recently released a report summarizing how small businesses’ premiums for health insurance tend to be 18% more than large firms’ premiums, and highlighting how health insurance reform will lower premiums for small businesses. Sebelius outlined that health insurance reform will lower premiums in four important ways:
- Health insurance exchange. Health insurance reform will create a health insurance exchange. The exchange will pool together millions of Americans with small businesses and their employees. This pooling will increase competition and purchasing power in the insurance market, which will have the effect of lowering premiums. The exchange would also decrease small firms’ administrative costs, as it will be easier to compare health plan prices, benefits, and quality.
- Small business tax credit. Health insurance reform will provide a tax credit to millions of small business nationwide. The credit will save a percentage off a small business’s premium costs.
- No more “hidden tax.” Because health insurance reform will expand health care coverage to all Americans, the “hidden insurance tax” of more than $1,000 added onto family policies to cover the cost of care for those without insurance, will end.
- No more arbitrary premium hikes. Health insurance reform will prevent insurance discrimination based on health status. This reform measure includes preventing coverage denial based on a pre-existing conditions, preventing premium increases when someone falls ill, and prohibiting charging more if someone is a woman. Health insurance reform will also limit the amount insurance companies may spend on administrative costs, and will require transparency among insurance companies so small business owners can see how insurance companies are spending premium dollars.
Read the full report here.