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Spotlight on Small Business Health Coverage at House Hearing (Medpage Today)

WASHINGTON -- Members of a House committee tangled over the effect of the Affordable Care Act (ACA) on small businesses and what the best solutions could be, although there were a few hints of areas for agreement.

"The fact that there are people who couldn't get insurance before because of a preexisting condition -- I think the ACA did well in that area," said Keith Hall, president and CEO of the National Association for the Self-Employed, in Annapolis Junction, Md., at a House Small Business Committee hearing Tuesday on "Reimagining the Health Care Marketplace for America's Small Businesses." "I think it fixed a problem that's a very difficult problem ... But at the same time, we still have to pay for it."

Dania Palanker, JD, MPP, of the Center on Health Insurance Reforms at Georgetown University here, largely spoke in favor of the ACA, but agreed that high-risk pools for patients with chronic illnesses -- an option often suggested by Republicans as part of an ACA replacement plan -- "can work, but only if they're adequately funded." Palanker noted that estimates are that the pools could cost $1 trillion over 10 years if implemented nationwide.

Much of the hearing was devoted to debating the ACA's effect on small businesses. Committee chairman Rep. Steve Chabot (R-Ohio) pronounced the law a "disaster," noting that according to a 2015 survey of 810 small business owners by the National Small Business Association (NSBA), "Just 41% of firms of up to five employees offered health benefits; that's down from 46% in 2014. Overall, 65% of small firms offered health insurance in 2015, down from 70% in 2014."

"As a result of losses in the market, major insurers have bolted from the exits," Chabot continued. "Their withdrawal from Obamacare-established marketplaces left little to no competition within the exchanges, leaving consumers fewer choices in health insurance options ... The current system is in, quite frankly, a death spiral," he said.

But Rep. Nydia Velázquez (D-N.Y.), the committee's ranking member, painted an entirely different picture. The ACA "has not been a disaster" for the more than 20 million people who have secured coverage through it, she said. "This gain has been significant for small business employees. Between 2013 and 2015 ... [their] uninsured rate fell from 27% to less than 20%," she said.

"Now insurance companies are not allowed to charge [small businesses] higher premiums based on health status, insurance claims, or gender," noted Velazquez, the remainder of whose statement was read by Rep. Dwight Evans (D-Pa.) due to Velazquez having a bout of laryngitis. "The insurance market is fair and more consumer friendly than it was 7 years ago ... People no longer have to choose between starting a small business and retaining health benefits." At a recent healthcare event in Velazquez's district, "One New York entrepreneur said, 'I would not be able to own my business without the Affordable Care Act.'"

However, the statement continued, "As with any major law of this complexity, there have been challenges in implementation ... Markets have had mixed success in the Small Business Health Option Program (SHOP). I look forward to hearing testimony on these programs that could be improved."

Several of the hearing witnesses talked about the high cost of obtaining health insurance through the ACA's insurance exchanges. Tom Secor, MBA, a board member of the NSBA and president of the Durable Corp. in Norwalk, Ohio, said that in 2014, "I had to make the difficult decision ... to no longer offer health insurance due to increased cost and complexity of having to move to an ACA-approved plan ... Then the Obama administration ruled that we could continue our non-ACA approved plan due to the failure of a small business market developing," he said.

"Even with a non-ACA-approved plan, our average total cost per employee has risen 51.7% between 2013 and 2017 ... Our employees deserve better ... The small business community needs substantial relief from the ACA."

Hall decried the lack of health insurance options in many markets. "When you're in Lincoln, Nebraska and you only have one option, it's difficult to choose what's best for you and your family," he said.

But Palanker defended the law. "The increase in employer premiums didn't start with the passage of the ACA; it had been happening for many years. There also was a dramatic cut in employers offering health insurance before the ACA passed. Some employees who didn't get coverage through small businesses are now able to get coverage through [the ACA's] individual market."

Witnesses and committee members also discussed solutions for improving the healthcare marketplace. When the ACA was introduced, "President Obama said that every idea to bend the cost curve down was in this bill," said committee member Rep. Rod Blum (R-Iowa). "Give me one example where the federal government has bent the cost curve down [measurably]. The only proven way I know to decrease costs and improve quality is the miracle of the free market. We need to make patients consumers."

Secor called that an "excellent idea -- the key component is to have transparency in cost and quality."

But Palanker said the current healthcare marketplace "was created by the free market; employers created that on their own in the U.S. and that led to a large part of our system."

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