Commentary: Help for high health care costs
On June 1, Colorado became the first state in the nation to enact bipartisan legislation setting up a health insurance exchange. Gov. John Hickenlooper signed SB 200-a bill that creates Colorado's Health Benefits Exchange-into law, and now small business owners can have some peace of mind knowing that relief from high healthcare costs is on the way.
While not a perfect bill, SB 200 has the components necessary to ensure greater choice and competition in the market, and more affordable health insurance plans for the state's small businesses. However, it can be improved upon. One way they can do this is to make the exchange an active purchaser so it can negotiate lower rates for all of the small business clients.
This model of an exchange enables the administrators to do everything that can to get higher-value, lower-priced plans for their customers. Besides being able to negotiate for better rates, it provides greater transparency and oversight so consumers get the best bang for their buck. This should be the first modification and can be done through the regular legislative process.
The Health Benefits Exchange is one of the most important provisions of the Affordable Care Act for small businesses. This marketplace will allow small businesses to band together to purchase insurance at a lower rate. Once it is fully up and running in 2014, Colorado's small businesses and other consumers will be able to shop online, over the phone or in person to compare plans. It's a one-stop shop and gives entrepreneurs the ability to find the health insurance policy that best meets their needs and budget.
Nora Hill is the perfect example of a Colorado entrepreneur who needs a strong exchange with active purchasing power. She owns a chocolate and ice cream shop in Fort Collins, but has been unable to find an affordable policy for herself and her employees due to high costs and limited options. An exchange that has the power to negotiate for low cost, high-value plans would open the doors to health plans that Nora and so many others currently find closed to them.
There's substantial evidence to suggest that the exchange will in fact help rein in costs and expand access to health insurance for entrepreneurs like Nora. A study released by the Urban Institute in January found that total healthcare spending by small firms would decline by 8.7 percent, due mainly to cost savings in the exchanges. It also found that the average employer contribution per employee would decrease by 7.9 percent for small businesses. That's a huge chunk of cash for entrepreneurs struggling to keep their doors open, wanting to expand their company or needing to hire a new employee.
Now that Gov. Hickenlooper has signed SB 200 into law, Colorado's policymakers must make sure the health benefit exchange serves its function, which is to lower healthcare costs and increase coverage for small business owners and their employees. Making the exchange active will be achieve this.
Additionally, it's imperative that small business owners be appointed to the 12-member exchange board so the small business perspective can be included in the decisions this governing body makes. Laws can and, when possible, should be improved upon. Colorado is already off to a good start by moving quickly to implement key components of federal healthcare reform. But they have the opportunity to make it even better, and we hope they seize it.