Small Business Minnesota Op Ed on Minnesota’s Health Care Exchange

Minnesota has created a business environment that has attracted more Fortune 500 companies per capita than any other state; yet it’s rarely noted that small businesses employ more Minnesotans than all the Fortune 500s combined. Collectively, small businesses are Minnesota’s largest employer and the backbone of our state’s economy.

In fact, according to the latest available census data, 98.7 percent of Minnesota’s businesses are companies with less than 100 employees for a total of 1.2 million Minnesotans, more than 40 percent of our state’s workforce. The vast majority of these businesses, have less than 20 employees.

Yet, access to affordable healthcare for small businesses is disproportionately expensive or even cost-prohibitive compared to large businesses. As large-business profits soar to record levels, many small businesses are struggling to stay afloat. Big businesses have large pools of employees spreading out risk, the cornerstone to reducing costs. Simply put, “This is how insurance works.” Large businesses typically have expert healthcare staff negotiating rates and/or developing their own self-insurance plans to reduce costs even further.

Small business owners rarely have the expertise, time or resources to sift through hundreds of plans and are not part of a large pool of employees that leads to negotiating power or the ability to self-insure.

This means many small businesses cannot afford healthcare benefits at all. If they do offer health benefits, they are often subpar. The lack of affordable healthcare benefits leaves small businesses at a significant disadvantage in attracting and retaining talent, preventing costly turnover and missed days of work, and of course, the ultimate price of losing employees to illness. Many small business owners forgo insurance completely putting themselves at risk of bankruptcy should a severe illness fall upon the business owner or a family member.

Being able to offer healthcare benefits can make the difference between keeping a small business open or closing its doors.

It’s time to level the playing field. Lower priced, better quality health plans are commonplace in large businesses and among public employees. Small businesses need the same access to lower priced, better quality benefits in order to thrive.

The Minnesota Healthcare Exchange bill is part of the solution, (SF1 Lourey and HF 5 Atkins).

Creation of an Exchange is required under the Affordable Care Act. States have great latitude when establishing these online navigators of insurance plans. States can use taxpayer dollars to create nothing more than free advertising for an industry with skyrocketing profits or states can take a more active role leveraging exchanges to foster competition and provide relief for small businesses being crushed under the weight of healthcare costs.

As currently proposed in the Minnesota Exchange, an active purchaser (also called “smart purchaser”) selects plans that offer the best coverage for the best price. This lowers costs as carriers compete to be included in the Exchange to have access to more than a million potential customers and billions of dollars in sales. An active purchaser can also ensure quality improvement will be ongoing, not designed to meet set, static standards. It can encourage cost-saving innovations such as value-based plan design, payment and delivery-system reform, and successful prevention and wellness programs.

As an active purchaser, the Minnesota Exchange board can foster “free market” competition between qualified insurers while at the same time protecting the interests of Minnesotans who will benefit from finally having affordable options for quality health coverage.

However, highly-paid lobbyists are working around the clock to make the Exchange a taxpayer funded marketing tool for an already profitable industry. They want the Exchange flooded with any and all plans. Flooding the market with hundreds of plans is not “choice,” it’s a marketing gimmick. They are against conflict of interest provisions for the Exchange board members stating that people who gain financially from an industry should be the ones overseeing that industry.

Minnesota’s hundreds of thousands of sole proprietors make an average salary of $29,000 per year; virtually all small business owners with under 100 employees make less than $100,000 per year. Few, if any, can afford to pay a lobbyist and few can take days away from their businesses to be at the Capitol. Even so, Small Business Minnesota members, all small business owners, have been at the Capitol testifying in favor of the Minnesota Healthcare Exchange.

We have heard from dozens of small business owners with real business needs who favor the healthcare exchange bill, active purchaser and conflict of interest language. We have not heard from any small business owners outside the insurance industry who oppose this effort.

Voting for the Minnesota Healthcare Exchange with its active purchaser and conflict of interest provisions will be a strong vote in favor of small businesses.

Small Business Minnesota Board of Directors

(763) 280-3316

Small Business Minnesota is a statewide, nonprofit, nonpartisan membership association. All members are Minnesota sole proprietors and other small business owners with less than 100 employees. Our mission is to use fact-based information to voice the true needs of small businesses in Minnesota. Learn more at smallbusinessmn.org.

More information on the Minnesota Health Insurance Exchange at http://www.mn.gov/hix.