Insurance exchanges will help Md.'s small businesses

New feature of the federal health care law will allow business owners to chose the plans that are best for their employees

July 28, 2011|By Kathleen Sebelius

For millions of small business owners in Maryland and across the country, the health insurance market is broken. Because there's so little transparency, shopping for coverage can be a headache. And small companies can pay up to 18 percent more than their bigger competitors for the same coverage. No wonder small business owners often tell me, "I can afford to pay salaries or I can afford to pay health insurance, but I can't afford both."

This isn't just unfair. In an economy where small businesses create two thirds of jobs, it's a huge drain on economic growth.

But last year's federal health care law, the Affordable Care Act, is giving small business owners better options. Today, many Maryland companies are eligible for up to a 35 percent tax credit that can reduce their insurance costs by more than a third. And starting in 2014, small businesses will be able to get coverage through state-based insurance exchanges that will form a new competitive marketplace.

How will exchanges help Maryland's small business owners? First, they will serve as a one-stop shop where employers can see all their health plan options, compare prices and benefits, and pick the coverage that is right for their employees. Business owners will be able to get answers to questions about coverage and find out if they're eligible for tax credits that make coverage more affordable.

Second, exchanges will force insurers to compete for business. By bringing transparency to the marketplace, exchanges will make sure that insurers that want to add customers have to offer better coverage, a better price, or both.

Third, exchanges will ensure a basic level of coverage. All plans sold in the marketplace will offer a minimum package of benefits similar to those offered by employers today, so insurance purchased by small employers will protect workers if they get sick.

Finally, exchanges will allow small businesses to offer their employees a range of plans from different insurers just like very large employers and the federal government do, while still receiving a single bill and writing a single check.

Here's what the insurance market will look like for Maryland's small business owners once the exchanges are up and running: they'll be able to visit one website, and, with a few clicks, find the plans in the area that meet their needs and budget. Because of the quality protections put in place by the marketplace, there won't be huge gaps in coverage that could take away care when employees need it most. And thanks to the transparency and comparison tools, small business owners can be sure they're getting the best price and health coverage for their workers.

Maryland is already moving forward to make this more competitive and transparent insurance market a reality. The state has received a $1 million grant from the U.S. Department of Health and Human Services to research how its exchange can ensure quality, affordable health insurance choices for consumers. The state has put in place a nine-member board of trustees to guide the Maryland Health Benefit Exchange, and this board has begun developing information technology systems that will make it easier for people to learn about their coverage options.

Small business owners are, by their nature, risk takers. They're not afraid to make sacrifices and work hard to pursue their dreams. But taking a financial risk is not the same as risking your health or the health of your family. That's why bringing some fairness to the health insurance market is so critical to unleashing Maryland's entrepreneurs.

We have a long way to go until 2014, and it takes time and planning to be sure that the insurance market will work properly for consumers and small businesses. But Maryland's small employers can get help right now by using the health insurance finder at to find the insurance options currently available to them in their state and zip code. Millions of Americans have already used this vital resource to find coverage.

For too long, small business owners in Maryland and across the country have had to shop in an inferior health insurance marketplace with higher prices and worse options. With the new exchanges, we'll finally give them a health insurance market that works.

Kathleen Sebelius is secretary of the U.S. Department of Health and Human Services.

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