Paula Noonan
Small business owners face the daunting task of purchasing health insurance for their employees. Once the Affordable Care Act goes into effect, it will be difficult if you have fewer than 50 employees. Deciding which plan to choose is difficult. It's difficult to decide how much to pay from company coffers and how much to require from employees. Deciding whether to offer an individual plan or a family plan can be difficult.
Every decision has a cost out of your revenue, impacting profits, investments, employment, the difference between part-time and full-time employment, and more. Most small businesses use intermediaries, which incur additional costs in the form of sales commissions. Insurance premiums have been rising every year, especially recently with upward pressure on inflation.
Last year, the National Federation of Independent Business conducted a health insurance survey to understand the current state of health insurance's impact on small businesses. The results are not very good.
Stay informed: Sign up to receive Daily Opinion in your inbox Monday through Friday
The most pressing issue for small employers is the ever-increasing cost of health insurance. The cost of insurance has been a concern for small business owners for 40 years since research by the National Federation of Independent Business (NFIB) conducted research, but small employers are now confident that they will soon be able to provide health care to their employees. It is said that they may not be able to afford to provide such services. “Ninety-eight percent of small businesses offering health insurance are concerned that their health care costs will become unsustainable within the next five to 10 years,” the study said. That means many small businesses and many employees face a dire future.
“The cost of health insurance is by far the biggest challenge for employers who offer health insurance and those who don't. Smaller employers compete for talent to fill open positions. “We recognize that health insurance is an important benefit for many employees and job seekers,” said Holly Wade, executive director of the NFIB Research Center.
Small business owners face a classic pinch. You save money by not offering health insurance, but you face increased employee sick leave, turnover, and employee dissatisfaction. If you offer insurance, you face rising premiums, complex tax systems, and government incentives that are helpful but difficult to calculate. It's getting tougher.
Let's move on to the nitty gritty. In 2022, employers paid an average of $6,584 in annual health insurance costs for single workers and $16,357 for families, according to Value Penguin and Lending Tree. For businesses with 49 or fewer employees that meet the ACA requirements, he will be $322,616 less than the cap. This leaves an additional $1,327 that the employee must cover in their individual plan and an additional $6,106 that they must cover in their family plan.
An option for employers with fewer than 25 employees is SHOP (Small Business Health Options Program). But employers can't pay employees more than $56,000 a year, and employers must pay at least half of every worker's health insurance plan. The government program would then cover up to half of the employer's annual health insurance contributions.
Given these factors in Colorado, it's easy to empathize with the small business owners who are creating jobs at the heart of the state's economy.
When there is a difficult problem, someone or a group of people comes together to come up with a solution. That's what's happening with HB24-1075. At least this bill is the beginning of a possible solution.
The bill, “Analysis of a Universal Health Care Payment System,'' sponsored by Rep. Karen McCormick of Longmont, asked the Colorado School of Public Health how a universal single-payer payment platform would benefit Coloradans. It will give you the power to analyze how it works.
The concept is simple. Instead of paying premiums to numerous commercial insurance companies in the marketplace, all Coloradans would pay premiums based on the solvency of a single nonprofit public fund. The company then pays private practitioners, hospitals, clinics, and other health care providers directly for their services.
The study will analyze the cost of providing current comprehensive health care services and other potential health care options such as home health care and long-term care. The concept is to understand how much care state residents can receive and at what cost. The private sector is under a single universal payment system.
The advantages of this possibility are self-evident. For healthcare providers, it eliminates the complexity of navigating the bureaucracy of multiple insurance companies. For Coloradans, the complexity of finding affordable insurance coverage is eliminated.
For small business owners, an uncompetitive playing field to attract employees increases competition. Their business operations become more profitable because medical insurance is no longer the cost of goods sold. For nonprofits, more funds are focused on the mission.
Large employers may lose some employment advantages, but they can make more money on investments, shareholders, and payroll than on insurance.
Does it sound too good? You can see that in HB24-1075. That may be exactly as good as it seems for the millions of people affected by medical costs that are constantly being spent on personal bottom lines.
Paula Noonan owns Colorado Capitol Watch, Colorado's leading legislative tracking platform.
