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Small businesses wonder what health overhaul has in store for them

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Small business health insurance
Melissa Martinson, president of Technomics Research, runs her small business from her home in Medina, where she was photographed Thursday, May 9, 2013. Martinson has five employees who live in different parts of the metro area. She's hoping Minnesota's new health insurance exchange program will help her provide them with insurance.
MPR Photo/Jennifer Simonson

Organizations representing small business have been among the sharpest critics of the federal health care overhaul. But the opposition is not universal. Some small business owners in Minnesota hope they'll find new health insurance options thanks to the law and MNSURE, the new state new online insurance marketplace it created.

Although businesses with fewer than 50 employees don't have to provide insurance to their workers under the federal health care law, business owners like Melissa Martinson nevertheless want to.

Martinson, president of Technomics Research, a small health care consulting business in Medina, Minn., began shopping for a company health plan for the firm's five employees about 10 years ago.

"Every year I'd go to a number of insurance brokers and say, 'what can you do for the company?'" she recalled. "And they would do some analysis and come back and say, 'well I'm sorry' but because of, you know, my age, they were unable to do anything better than we could get as individuals."

At 56, Martinson is a decade or two older than her youngest workers. She is healthy and has no pre-existing conditions, but her age alone raised the premium rates for a group plan.

As a result, it made more sense for the employees to buy individual plans, because they were less expensive. The business helped them shoulder the cost with profit sharing.

Martinson is hoping the new online insurance marketplace, MNSURE,  will offer a small business health insurance plan that's more affordable than the current arrangement.

On Oct. 1, MNSURE will allow individuals and small groups to comparison shop for health insurance policies that take effect in January 2014. More than 1 million Minnesotans are expected to use the new marketplace as an online gateway to health coverage ranging from government programs such as Medicaid to private individual coverage and small group insurance that would cover a small business such as Martinson's.

Her hope is based on the federal health care law's insurance reforms. They're designed so small businesses are charged the same baseline rate for each employee's insurance.

"I'm keeping my fingers crossed that means that I will be able to purchase health insurance for everyone in my company," Martinson said.

INSURANCE OPTIONS FOR SMALL BUSINESSES

Under the federal Affordable Care Act, businesses and groups in Minnesota with up to 50 full-time employees can choose different routes to health insurance. All provide tax breaks for employers and employees.

• Employer buys one plan to offer to all employees;

• Employer picks several plans to offer employees and lets them choose between those plans;

• Employer opts for "defined contribution" plans that allow businesses to provide employees with an amount of money they can use to buy the plan of their choice. The employee is responsible for any cost beyond the employer's contribution.

For more information on small employers and health coverage, visit the U.S. Department of Labor.

The law is designed to alleviate a problem that's kept small businesses, even those with healthy workforces, from getting affordable insurance, said April Todd-Malmlov, MNSURE's executive director.

Premiums have been based on the health of individuals in the group being insured.    Todd-Malmlov said small group plans will no longer be able to base premium rates on workers' health conditions.

"Today, if you have sick people, your rates are going to be higher based on the risk," she said "In the future, they can't rate based on their health status, so everyone is in the same pool so the rates can average out."

There are a few big exceptions. Insurers will still be allowed to raise prices based on tobacco use, location, and age of people in the group -- which means Martinson may be disappointed. 

Whether MNSURE will provide Martinson with lower premiums as a group or her employees as individuals is still unclear. Minnesota insurers have until May 17 to submit their plans for state approval to sell on the new online marketplace. So it's unknown how many plan varieties will be available and how much they'll cost.

Whether small employers will buy insurance through MNSURE or other so-called online health insurance exchanges in the United States is a big question for the Affordable Care Act, and could be for a while.

There are just too many variables in play to predict prices for health plans and how businesses respond to them, said Paul Fronstin, a researcher with the non-profit, non-partisan Employee Benefit Research Institute based in Washington, D.C.

"We don't know what the market is going to look like, and to even look at what happens in 2014 and say, 'that's it,'" he said. "Things change and businesses change and economics change and the exchanges will change."

Martinson is taking a wait-and-see approach. When the health plan rates are available, she'll look to see what rate her business could get as a group while asking each of the people in the company to see what they can get as individuals. 

Then, she said, as a group they'll decide which path to take.