Small businesses eye Obamacare rollout warily

Some companies face higher rates, uncertainty

November 22, 2013|By John Fritze, The Baltimore Sun

WASHINGTON — — Drew Greenblatt has bought health insurance for his 29 employees at Marlin Steel Wire Products for more than a decade — an expense he believes is essential for any safety-conscious manufacturing firm.

But for Greenblatt, who has owned the Baltimore-based company since 1998, the effort was complicated this year when his insurer proposed raising premiums 49 percent because of new requirements in the Affordable Care Act.

"Our plan, in effect, is not viable because it's not affordable," Greenblatt said. "The costs have gone up despite all the promises our costs would go down."

While much of the focus on the troubled rollout of Obamacare has been on individuals who are losing their coverage or are unable to buy a new plan on botched websites, small-group policies purchased by businesses such as Greenblatt's also are being affected by the new law.

And many business owners in Maryland are warily watching the problems unfold in the individual insurance market as the state prepares to launch its marketplace geared specifically to small businesses in April.

"Of course we're concerned," said Ellen Valentino, executive director of the Maryland chapter of the National Federation of Independent Business, which opposes the law. "There's a national concern over competence, and I think that's going to bleed down into the small-business community."

State officials note that, in contrast to the individual insurance market, Maryland has long benefited from a strong and well-regulated small-group market. Many requirements of Obamacare already were in place in Maryland. And the state already had helped in pooling risk through a system that's similar to the exchange called for in new federal law.

"Maryland has a stable small-business market," said Dr. Joshua M. Sharfstein, the state's health secretary. "We don't feel quite the urgency around the small-group exchange because of the small-group market in Maryland — and that's what we've certainly heard from many small businesses."

Maryland, among a minority of states that elected to build its own exchanges rather than leave it to the federal government, has twice delayed the rollout of its Small Business Health Options Program, or SHOP, for businesses with two to 50 workers.

Given that businesses with fewer than 50 workers are not required to buy coverage — and given that they usually can find a decent deal today — Sharfstein said it made sense for the state to delay the launch. The continuing effort to fix the individual marketplace also will help lead to a smoother rollout of the SHOP exchange, he said.

Small businesses are expected to pay from 5 percent less to 15 percent more for premiums next year in the small-group exchanges under rates Maryland regulators approved in September.

The state's individual exchange faced problems immediately after its opening Oct.1 as many people met with frozen computer screens when they tried to create accounts. The exchanges set up by the federal government in 34 other states have faced similar problems. About 1,700 individuals in Maryland had enrolled in health insurance coverage through the state marketplace as of Nov. 9.

Pat Donoho, president of the Maryland Retailers Association, said he has heard from members with experiences similar to Greenblatt's. But the main problem, he said, is that business owners remain uncertain about what the implementation of Obamacare will mean for their bottom line.

"How do you plan?" he asked. "It's been tough."

Assessing the extent to which the Affordable Care Act is responsible for changes in the small-group market is difficult. Greenblatt acknowledged that rates were increasing 8 percent to 12 percent a year before the law.

Testifying before the Senate Committee on Small Business and Entrepreneurship on Wednesday, Greenblatt said his company ultimately switched carriers and selected a plan with premiums about 10 percent higher and larger out-of-pocket costs.

Marlin makes custom wire baskets, wire forms and precision sheet-metal assemblies, and exports those products around the world.

"This is the kind of instability that's harmful to our economy," Greenblatt said. "How do I quote jobs against my competitors in China … when I don't know how much my costs are going be?"

David M. Allen owns a medical billing company in Boulder, Colo., that for years picked up the cost of premiums for its 33 employees. Allen told the Senate committee that to keep costs down, his plans covered only generic drugs. Because that doesn't meet the federal law's minimum coverage requirements, his insurer proposed a 52 percent increase in premiums next year.

"I will have no choice but to require my employees to contribute substantially to the cost of the premiums," Allen told the committee. "The irony is that none of my employees currently take any brand-name prescriptions. … This law has turned what was a potential expense for my employees into a guaranteed expense."

That kind of story plays directly into voter anger at President Barack Obama and congressional Democrats over the 2010 law. A majority of Americans, 55 percent, disapprove of the law, according to a Gallup poll this month.

"This has been a catastrophic failure across America," said Idaho Republican James E. Risch, the ranking Republican on the small-business committee.

Democrats have pushed back on accusations that Obamacare is responsible for every change taking place in the insurance market. Many companies were dropping coverage and increasing costs long before the law was approved, they note.

"The rate of increase was going up substantially before the Affordable Care Act," said the committee's chairwoman, Louisiana Democrat Mary Landrieu, "which is one of the reasons why it was passed."

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