How Will Reform Affect My Health Care Costs?

­­­­­­As a small business owner, is health reform going to do anything to make my insurance premium more affordable?  Can I expect any near term cost savings from health reform?

This post addresses a few significant provisions of the health reform legislation and its impact on affordability, premiums and costs. There’s good news and bad news in the next year.

 

1. Review of Health Insurance Premiums and Premium Refunds

The good news is that the legislation sets up federal and state review processes to evaluate health insurance premiums this year. Starting in 2011, insurance companies must pay at least 85% of large group and 80% of small group premiums in claims (across their book of business). Employers will be issued a refund if the insurer pays less than this amount in claims.

2. Small Business Tax Credits for Providing Health Insurance

Effective January 1^st 2010, eligible small businesses and non-profits will receive tax credits to help them pay for providing group health insurance for their employees. Unfortunately few of our clients will benefit because businesses must have average wages of less than $50,000 to be eligible. If you believe that your company may be eligible, please contact us for details.

3. Increased Benefits

The legislation contains significant benefits increases (including expansions in coverage of dependents and preventive care) that will increase short term costs. Please see our last post for more information.

 

What we hope for in the future

We hope that this legislation will be a giant step forward in creating pricing transparency for medical services.

In Massachusetts, a government review has disclosed significant differences in pricing agreements between insurers and medical facilities based on the bargaining clout of the large hospital groups.  In other words, the price of care is based on bargaining power not quality of care or medical effectiveness. Why are we not surprised?!

In 2014, government subsidies will begin assisting lower income families purchase health insurance. These subsidies are funded by our tax dollars; the public has a clear interest in transparent pricing related to medical outcomes.

We develop these blogs in response to your questions.  Keep them coming!