With each passing day, the federal healthcare law (known to many as “ObamaCare”) seems to be evolving as one of the most polarizing issues of our generation. Whether you love it or hate it, or find yourself somewhere in between, all sides can agree on one thing: every American deserves access to affordable healthcare.
As this law unfolds, small business owners – indeed, our state’s and nation’s leading job creators – and their employees deserve the opportunity to achieve their dream and have greater certainty and hope about tomorrow. The American Dream is what has made our nation the envy of the world, and that is achieved by allowing entrepreneurs the flexibility to run their businesses in the best way possible.
Unfortunately, a bill currently sitting on the Governor’s desk hurts small businesses and their employees by eliminating an important healthcare option for “mom and pop” small businesses that are trying to provide meaningful coverage for their employees.
Senate Bill 161 by Senator Hernandez, also known as the “Stop-Loss Bill”, prohibits the sale of certain levels of stop-loss insurance to small businesses that desire to set up a self-funded health benefit plan for their employees.
For decades, thousands of small business owners in California and the nation, many with fewer than fifty employees, have used self-funding instead of traditional insurance to offer health coverage to their employees. Like large employers, unions, and the government, they choose to pay their employees’ healthcare costs directly. To protect their business from any unexpected catastrophic claims, they purchase protection known as “Stop-Loss” insurance. This has allowed the employer and employee much more flexibility to tailor a plan that offers the health benefits their employees want and use the most instead of a more costly, one-size-fits-all plan that proves wasteful and untapped.
Traditional health insurance plans typically offer higher costs but fewer benefits each year, while self-funded plans give the small business owners and workers quality health coverage they would not otherwise be able to take advantage of.
SB 161 virtually eliminates the ability for the smallest of small employers and employees to acquire affordable healthcare coverage by specifically pricing them out of the California market. There is nothing in the Affordable Care Act that discourages employers from setting up a self-funded plan for the benefit of their employees, and yet the Legislature wants to make it nearly impossible for these struggling businesses to make affordable, quality health insurance available to their extended workplace families.
Proponents of SB 161 have voiced the concern that small employers with young and healthy workers may choose to self-insure rather than join the state’s new health benefits exchange, Covered California. NFIB/California and small business owners generally support the concept behind an exchange – increased choice, competition, and coverage options – provided it’s done right, and we’ll see how the exchange evolves in time.
But regardless, the exchange isn’t and shouldn’t be the only choice for small businesses – and our politicians shouldn’t be unfairly forcing the hand of an already uncertain small business community.
By setting up self-insured plans, small business owners have been able to reduce costs, improve benefits, and offer other cost-containment features that reduce healthcare expenses such as wellness and safety promotion. SB 161 would make all of those options disappear overnight.
Why do our state leaders want to take away the California Dream and kick a terrified Main Street community while it is down? This is the wrong message Sacramento should be sending to the very community our state is depending on to get us out of the economic and unemployment hole we’re in.
SB 161 will do irreparable harm to the countless small business owners who see this as their only recourse to providing quality, affordable health insurance, and to their employees who are looking for more certainty during extraordinarily uncertain times.
Let’s hope Governor Brown realizes that healthcare certainty and hope starts on Main Street, and that he will swiftly veto SB 161 when it arrives at his desk.