Can Insurance Exchanges Save Small Businesses?

by admin on 23/10/09 at 11:53 am

Small businesses have been among the hardest hit in the current economic downturn. A big cost that small businesses have had to bear is the health care of their workers. Small businesses don’t compete on the same playing field as large companies and as a result don’t get as competitive rates.

Proponents of insurance exchanges, which have been proposed in the current health care bill making its way through Congress, argue that these entities could level the playing field and make health coverage much more affordable for small businesses.

Backers of health insurance exchanges testified on Capitol Hill earlier this week, saying that these entities could be a huge boon for small businesses to increase employment. Health care costs have forced many small businesses around the country to cut back on employees. Insurance exchanges, as proposed in legislation approved by the Senate Finance Committee, would level the playing field and allow small businesses to purchase health insurance plans at rates competitive to those that big companies pay.

Supporters say that the proposed insurance exchanges would help small businesses by spreading risk among a greater number of companies, thereby lowering premiums. The exchanges would also allow small businesses to compare the services, quality, and price of numerous plans offered.

Under the bill approved by the Senate Finance Committee, companies with up to 100 employees would be able to enter into an insurance exchange. Sen. Olympia Snowe, a key supporter of the legislation, wants to do away with measures contained in the bill that would fine companies with over 50 employees who do not offer health care plans to their workers.

There is some debate as to whether insurance exchanges will be local, regional, or national. Many small business proponents are pressing for a national plan, arguing that some states do not have enough competing insurers to create an efficient exchange.