Small businesses are very important for an economy as they make the economy grow. These businesses face very difficult challenges and a lot of charges when they want to provide health coverage for their employees. Some countries charge premiums on small businesses that are 18% higher than the premium charged on large businesses. Health reforms help these small businesses to make that coverage more affordable. Here are some ways health reforms can change small businesses:
Creates health insurance exchanges to increase bargaining power and reduce admin costs
Some of the small businesses not only face premiums that are 18% higher than of the large businesses but also face very high administrative costs to set up and maintain a health plan for their workers because they have very little bargaining power. As a result, they are at a disadvantage when negotiating with insurance companies.
Health reforms will change this dynamic by forcing health insurance companies to give more choices and lower the prices, which will increase the bargaining power of small businesses. According to the Congressional Budget Office, the coverage that small businesses purchased through an exchange ‘would have lower administrative costs, on average, than the policies those firms would buy under current law, particularly for very small firms.’
Ends price discrimination against small businesses with sick workers
Small businesses with sick workers face higher premiums. These businesses can face significantly higher premiums if one of their workers fell ill, which can lead to a swift price increase which is unfair because at that moment small businesses need the insurance the most. Health reforms can stop these sudden increases in prices by prohibiting insurers from charging more from the small businesses no matter the circumstances.
Increases health care security to unlock ‘job lock’
Many countries have a healthcare system where workers are locked or trapped in their current jobs because large firms offer family coverage and there are risks of leaving the job from which workers don’t want to suffer. This ‘job lock’ causes various workers to work at the same firm even though they may be more productive working at small firms or working on their own. Health reforms will provide health security for everyone in an economy, health reforms will also eliminate the risks the workers might suffer from making it easier for the small businesses to attract the best workers or encourage workers to start their own business.
The cost of treating the workers who do not have any insurance in every healthcare premium has a ‘hidden tax’ of over $1000. Health reforms can reduce hidden tax drastically by dramatically expanding coverage.
Reduces premiums in small group markets
Small and new businesses cannot survive in the industry because their costs are very high since they have to pay for high premiums. Health reforms will lower these premiums, helping businesses to survive.
Tommy Williamson did his degree in psychology at the University of Edinburgh. He is interested in mental health and well-being.
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