Health Insurance Help Arrives for Small Businesses

Health reform has brought an immediate potential benefit to many small businesses.

Andrew Cannon, research associate
Andrew Cannon

Help has finally arrived for small businesses and their employees. The rapidly rising cost of health insurance has made it extremely difficult for many small businesses to provide their employees with health insurance, and entirely precluded many others. In addition, because they lack the bargaining power and large risk pooling of larger employers, small businesses face higher premiums than larger employers.

Health reform, or the Patient Protection and Affordable Care Act (PPACA) should ease this problem for some small businesses. Firms that pay for at least half of their employees’ premiums and have 24 or fewer employees may qualify for a health insurance premium tax credit of up to 35 percent of the premium’s average cost.

An Iowa Fiscal Partnership policy brief details the small business health insurance premium tax credit. The table below illustrates potential credits based on number of employees and how much they are paid.

table-HC creditsFamilies USA, a national consumer advocacy group, and Small Business Majority, released a report this week estimating that as many as 51,100 Iowa small businesses may be eligible for some portion of the tax credit, with as many as 14,000 of those eligible for the full 35 percent credit.

Though similar state-level incentive programs have had varying levels of success in inducing small businesses to provide insurance to their employees, the PPACA credits appear poised to make a real difference for small businesses.

Blue Cross Blue Shield of Kansas City saw the tax credits as an opportunity. It began marketing the new tax credit to small businesses that were not providing insurance benefits to employees.

Its efforts had a tremendous payoff for Blue Cross Blue Shield of Kansas City, to small businesses in that area, and to their employees. Sixty small businesses in the area that had previously not offered health insurance to employees signed up for BCBS’s small business health insurance plan. As a result of the tax credit and BCBS-KC’s marketing efforts, Small Group sales have increased 179 percent between April and June of this year, meaning 5,000 new customers for it, and 5,000 more Kansas Citians with health insurance.

Posted by Andrew Cannon, Research Associate

Medicare ‘Advantage’? Private carve-outs cost more

Private carve-outs such as Medicare Advantage drive up costs.

Bad policy should be bad politics.

Nevertheless, a group of members of Congress recently persisted in promoting a wasteful private-sector subsidy that undermines the highly successful Medicare program.

The Iowa Hospital Association, in a recent Twitter post, noted the letter from 58 House members against President Obama’s nomination of Dr. Donald Berwick to head the Center for Medicaid and Medicare Services. The letter claims that health reform could jeopardize so-called “Medicare Advantage” programs.

Public vs pvt insuranceWe can only hope.

As shown in the graph at right, public-sector health insurance provides better bang for the buck than private  insurance.

Moreover, specifically with regard to Medicare Advantage, substantial evidence and expert analysis has demonstrated the parasitic effects of such programs on traditional Medicare.

See an excellent primer that breaks down the problems with Medicare Advantage plans and why it is that these private carve-outs from Medicare drive up costs and make it more difficult to serve Americans who depend on Medicare.

Posted by Mike Owen, Assistant Director

Why health reform matters — especially in rural Iowa

Iowa’s 1.2 million rural residents need increased access to affordable, quality health insurance

Andrew Cannon

On the eve of her marriage, Suzanne Castello, a Grinnell resident, looked forward to quitting her job at a community college and working the family farm with her husband full time.

Though Castello had enjoyed good health benefits at her off-farm job, her husband had been covered through an insurance plan purchased on the non-group, private market for a number of years, and they assumed that adding her to the plan would not be a problem.

Due to a previous miscarriage and a chronic jaw ailment, Castello was denied coverage. Around the same time, Castello and her husband learned that she was pregnant. The Castellos continued to search for an insurance plan that would cover her and had some luck, though the plans that would agree to cover her had a 10-month pre-existing condition exclusion — no insurer would cover the pregnancy.

Castello enrolled in COBRA — the federal legislation that allows workers to continue their job-based coverage for up to 18 months, COBRA enrollees must pay 102 percent of the premium cost.

“We were hemorrhaging money, but we didn’t qualify for Medicaid,” Castello said. “It really rankles me that we’re seeing something as fundamental as childbirth as kind of like, ‘Would you like dessert with that meal?’ There’s a double-standard between group policies and individual policies, which cover most farmers.”

Though the pregnancy was complication-free and Castello has enjoyed good health since then, finding affordable insurance is still a challenge for her.

“Right now, I have the flavor-aid version of an insurance policy – it’s high-deductible, high cost-sharing. It’s basically just coverage for catastrophic events, because the deductible is so high,” Castello said.

“It’s irksome that I’m a healthy person and I can’t get decent health insurance.”


Nearly 20 percent of America’s uninsured live in rural areas. Of those, if they do not have insurance through an employer-sponsored plan or public coverage, such as Medicaid, they have to buy a plan on the non-group market. This is especially expensive, as the costs are not spread across a larger group of employees and their families.

Nationally, only 8 percent of the population receives its insurance through the non-group market. In Iowa, up to 37 percent of rural residents get insurance this way, subjecting them to high premiums for less-regulated plans that can deny coverage for a pre-existing condition for up to 12 months.

Iowa’s 1.2 million rural residents need increased access to affordable, quality health insurance.

Posted by Andrew Cannon, Research Associate.

See Cannon’s IPP Snapshot: Health coverage in rural Iowa.

Beyond the shouting — understanding reform

Andrew Cannon
Andrew Cannon

Vigorous debate between proponents and opponents on the merits of congressional health reform proposals has, in recent weeks, descended into shouting matches. Unfortunately, understanding of the proposed reform has not always been as deep as the passion on the topic.

Recent discussions have brought attention to a provision deep within the proposal regarding end-of-life counseling for Medicare recipients. Opponents have suggested that the provision opens the door to euthanasia.

A closer look at the actual provision, however, shows that these concerns are overblown. The critical language in the proposal produced by the House Energy and Labor, Education and Labor, and Ways and Means committees reads:

“[T]he term ‘advance care planning consultation’ means a consultation between the individual and a practitioner … regarding advance care planning … Such consultation shall include the following:

“(A) An explanation by the practitioner of advance care planning, including key questions and considerations, important steps, and suggested people to talk to.

“(B) An explanation by the practitioner of advance directives, including living wills and durable powers of attorney and their uses.

“(C) An explanation by the practitioner of the role and responsibility of a health care proxy.

“(D) The provision by the practitioner of a list of national and State-specific resources to assist consumers and their families with advance care planning …

“(E) An explanation by the practitioner of the continuum of end-of-life services and supports available, including palliative care and hospice, and benefits for such services and supports that are available under this title. …”

The provision would allow Medicare to reimburse medical professionals for voluntary end-of-life consultations with Medicare patients. Such consultations would allow Medicare enrollees to make medical decisions before being incapacitated by an illness, or allow the patient to transfer the medical decision-making power to a loved one (a “health care proxy”).

As Senator Johnny Isakson, R-Georgia, pointed out, this provision actually protects Medicare enrollees and their families:

“[T]he most money spent on anyone is spent usually in the last 60 days of life and that’s because an individual is not in a capacity to make decisions for themselves. So rather than getting into a situation where the government makes those decisions, if everyone had an end-of-life directive or what we call in Georgia ‘durable power of attorney,’ you could instruct at a time of sound mind and body what you want to happen in an event where you were in difficult circumstances where you’re unable to make those decisions.”

The “practitioner” described in the legislation is carefully defined and limited as being only a physician, a nurse practitioner, or a physician’s assistant. The relationship between a patient and his or her care provider is in no way disrupted by government officials or an anonymous “panel.”

The provision would block reimbursement for counseling promoting euthanasia as an option. Euthanasia and physician-assisted suicide remain illegal in the majority of states, including Iowa, and this provision does nothing to alter that.

Though the recent discussion of the end-of-life counseling provision in the health reform proposal has brought a considerable amount of disinformation and heated rhetoric, it has brought attention to a service that has been long overlooked.

Jon Radulovic of the National Hospice and Palliative Care Organization told Kaiser Health News that that the discussion is “providing the end-of-life care community with an opportunity to talk about what good care is and the services that are available.”

While the subject of vociferous and inaccurate protests, the end-of-life consultation provision has been endorsed by a number of advocacy and medical groups, including the AARP, the American College of Physicians, and Consumer’s Union, among others.

Posted by Andrew Cannon, Research Associate

Iowa Uninsured: New — Startling — Numbers

Families USA today released a new report that crunches more numbers about uninsurance in Iowa. The numbers are startling.

Mike Owen
Mike Owen

According to the nonpartisan organization, about 686,000 Iowans — about 1 in 4 under age 65 — were without health insurance at some point during 2007-2008. We typically see figures for uninsurance in Iowa just under 300,000, but those figures are from Census data designed to reflect people uninsured for an entire year.

This new study looks at that Census data and other sources to determine how many people were without insurance for a portion of two years — and Families USA director Ron Pollack emphasized, the study took care not to duplicate anyone in the count.

The study found:

  • •  More than 1 in 4 (about 27 percent) of non-elderly Iowans were without insurance for some part of 2007-08.
  • •  Of the 686,000 uninsured Iowans in that period, about 70 percent went without insurance for six months or longer.
  • •  Most of the uninsured — about 85 percent — are members of working families.

This is as much about the insecurity caused in the current economy as anything.

It was of concern enough before to know of almost 300,000 Iowans being without insurance, whether it’s over a full year or for one or two months.

A lot can happen in a time of uninsurance that jeopardizes a family’s financial security — not to mention the overarching concern of assuring that people have access to quality health care when they need it.

As the Families USA report shows, people can be working and still not have access to health care.

Our own research has shown:

  • •  Job trends keep showing that growing sectors (which are few right now) are sectors that are less likely to pay well and are less likely to offer health-insurance benefits.
  • •  Those trends also show that declining sectors are the ones where pay and benefits have been better.
  • •  The combination of these trends means that it’s more difficult to get insurance through employment.

We had seen these trends backed by Census information in the past, as well as the clear evidence of the value of public health insurance in keeping the situation from getting worse.

The Families USA report is an important addition to the factual discussion on which sound public policy decisions may be made regarding health care. In the research community, we welcome these findings.

Posted by Mike Owen, Assistant Director