After decades of proposals, multiple presidential attempts and failures, and a protracted and heated debate, last week Americans saw a monumental shift in our national health care policy.
By all accounts, the achievement of Congress passing a sweeping health care reform bill, and the signing of it into law by President Obama, is a historical step forward. While it can certainly be argued that the new law is not perfect, more than 16 years in Washington, D.C. has taught me that rarely, if ever, does "perfect" legislation make it into law. Rather, the old adage that we must not sacrifice the good in search of the perfect, rings true here, and the positive implications for American small businesses, many of them LGBT-owned, is certainly a step in the right direction.
For years, Americans—including small business owners—have been asking for change and reforms that would control the skyrocketing costs of health care and make health insurance more affordable for their employees and families.
To avoid disrupting the existing health care system, the new law will be implemented over a five-year period, between 2010 and 2014. The new law is designed to build upon the existing employer-based health system. Insurance can still be purchased from private insurance companies—although not-for-profit plans will be available—and the private-sector network of doctors, hospitals and other providers will not be changed. While Medicare will still cover retirees, now there will be additional help for seniors' drug costs, and Medicaid will continue to cover uninsured children and low-income adults. The provisions barring insurance companies from denying coverage for preexisting conditions and eliminating limits on lifetime benefits and are two crowning achievements that will positively impact the lives of million of Americans."
Below are several highlights of the new law that I believe will allow small business owners to place their focus where it belongs—on running their businesses instead of worrying about the rising cost of health care and the ability to offer insurance coverage to employees. I also believe that these new reforms will give LGBT entrepreneurs the option to courageously start their own businesses, without the fear of being denied health insurance because of their age, geographic location or preexisting condition.
A few changes small business owners can expect include:
- By 2014, states will have set up Small Business Health Options Programs (or "SHOP Exchanges") where small businesses will have the opportunity to pool together to buy insurance. Small businesses are defined as those with no more than 100 employees, though states have the option to limit pools to companies with 50 or fewer employees through 2016. Companies that grow beyond the size limit will also be grandfathered in.
- The law will enable, and fund with loans, the establishment of state-based nonprofit co-ops and consumer-owned insurance alternatives that would compete with privately held insurance companies. In addition, each state exchange will also offer at least two multi-state health plans (one of which must be a nonprofit) negotiated by the U.S. Office of Personnel Management (OPM). OPM negotiates a variety of health plans for 8 million federal employees and families in all 50 states.
- The Congressional Budget Office has estimated that small business insurance costs will be eased by 1 percent to 4 percent under the exchange plans.
- The small business tax credit is estimated at $40 billion from 2010 to 2019—an average of $4 billion per year over that 10-year period. In 2010, approximately 3.6 million small businesses will qualify for the tax credit to offset employer health plan costs.
- Businesses with 10 or fewer full-time-equivalent employees earning less than $25,000 a year on average will be eligible for a tax credit of 35 percent of health insurance costs. This tax credit will remain in place increasing to 50 percent of costs for the first two years a company purchases insurance through its state exchange.
- Starting in 2014, insurers will no longer be able to set rates or exclude coverage based on preexisting conditions.
- Starting in 2014, businesses with more than 50 employees will be required to either offer health care coverage that meets a minimum standard including coverage of both a specific set of services and 60 percent of employee health costs overall, or pay a penalty of $750 a year per full-time worker.
- "Cadillac" plans costing more than $10,200 per year for individuals or $27,500 for families (not counting dental or vision plans) will be subject to a 40-percent tax on the portion of the cost that exceeds the stated limit.
In addition, the new law reduces the "hidden tax" of about $1,000 that is paid by those who have insurance—a tax that goes toward covering the cost of uninsured individuals who rely on emergency rooms to get their care. By reducing the number of uninsured Americans, the bill will ultimately reduce the need for this tax. Also, we can look forward to the prohibition of discrimination in funding for federal public health programs, the allocation of $8.5 billion in funds for community health centers and improved data collection on health disparities—all of which will create significant change for Americans, including the LGBT community.
The debate over health care reform has been long and divisive, and we recognize that changes to the massive and complex American health care system will not come easily. We know that there is still work to be done to continue improving the financing and delivery of health care, including tax equity for employer-based health insurance coverage of same-sex couples and expanded Medicaid coverage for people with HIV. However, the changes that have taken place over the past weeks are essential for the economic health and vitality of small businesses, the LGBT community and all Americans.
I invite you to use this column as a starting point. Cut through the 30-second sound bites and partisan political rhetoric. Read more about the new law and what it will mean for you and your employees.
