Reform Realities: For Business

The Affordable Care Act will have major implications for many of Door County’s small business owners. Though most of the act’s strongest provisions affecting small businesses won’t take effect until 2014, businesses are prepping for the changes now.

Cain Goettelman, president of FLS Banners in Sturgeon Bay, said his family business has offered health insurance to their employees for over 20 years. Health care reform hasn’t changed much for his plan yet, but he’s bracing for impacts when it goes into full effect in 2014.

“It’s forcing us to decide what [our health care plan] will look like in the future, because what you have in place in September of 2011 will determine what you’re graded on,” Goettelman said.

Businesses of fewer than 50 employees will be exempt from employer responsibility requirements that begin in 2014. But to encourage small businesses to offer insurance, the act offers tax credits to businesses with 25 or fewer employees with an average annual wage of $50,000 or less that purchase health insurance for their employees. The maximum credit is 35 percent of the business’s contribution, with the credit rising to 50 percent in 2014.

That tax incentive is already having an effect. A recent report by Bernstein Research in New York which was cited in the Wall Street Journal showed that the percentage of employers with between three and nine workers offering insurance grew from 46 percent in 2009 to 59 percent this year.

By 2014, states must set up Small Business Health Options Programs, which it is hoped will put pressure on insurance companies to drive down rates and compete. Those exchanges, limited to businesses with no more than 100 employees, will allow small businesses and individuals to pool their purchasing power to lower the cost of coverage. Small businesses today pay premiums 18 percent higher than large businesses and face higher administrative costs to set up and maintain plans.

Mike Dietz, of Midwest Insurance Brokerage in Appleton, doubts that pooling businesses will lower rates. Dietz is Goettelman’s insurance broker and has worked with other efforts to pool businesses in the Green Bay area. He said that his experience has been that as rates increase for the group, healthy individuals leave to buy cheaper individual plans, leaving only the least healthy members on the group plan, raising premiums even more. What it could do, he said, is increase the power of large insurance companies.

“With the large pools, you could see a couple of insurance companies control the entire health insurance market in this country,” he said.

Goettelman fears that the influx of 32 million currently uninsured people into the system, coupled with a lack of cost controls on the delivery and health insurance side of the ledger, will drive up premiums for his business and many others. Still, he holds out hope for improvements.

“Thankfully,” he said, “there’s still time to make changes, to fix problems with the bill.”