Looking Out for the Little Guy: Small Businesses in the Affordable Care Act
March 27 2012
By Jennifer Ng’andu, Deputy Director, Health Policy Project, NCLR
Hispanic-owned businesses have been flourishing for several decades. In fact, some say business is actually booming. According to the 2007 National Survey of Small Business Owners, there are 2.3 million Hispanic-owned firms, and more than nine out of ten of those businesses are designated as small businesses. Still, it’s not always easy for these types of businesses. Small business owners struggle daily to stay on their feet and gain the financial security that keeps them sustainable. At least once a month, I get a call that usually goes something like this:
“I’m a Latino small business owner. I want to provide health coverage for my employees, but what’s on the market is just too expensive. Where can I find something that I can afford?”
Over the past several decades, insurance costs have escalated and employers—the source of most coverage options for Americans—have had to make difficult choices. The lucky ones negotiated fiercely to keep premium increases at bay. But most other large employers took the hit of the costs themselves or passed along the costs to their employees, increasing premiums or cutting benefits packages.
The financial strain was much more difficult for small businesses to handle. Because small businesses can’t enroll a large number of employees in coverage, negotiating against increases was almost impossible. The ones that could absorb the costs may have continued coverage for their employees, but they also had to scale back business operations. Many had to drop health insurance altogether.
Before the passage of the Affordable Care Act, the nation’s health reform law, when I received one of those calls, I often had no clue where to send those small business employers. What’s unfortunate is that these businesses were just trying to do the right thing—trying to protect the health and well-being of their employees. But when the Affordable Care Act arrived two years ago, circumstances changed.
Almost immediately after enactment, the Affordable Care Act provided options for small businesses to get some support for insurance premiums. Today, most small businesses with fewer than 25 employees can qualify for a major tax credit if they pay a fair share of their employee’s premiums.
There are also other benefits coming down the pike. In 2014, small businesses with fewer than 50 employees should not have to negotiate alone again. Each state can either choose to set up a Small Business Health Options Program (SHOP) or ask the federal government to do so. In a SHOP, a small business can purchase plans just like any large employer because they are joining together with other businesses instead of standing alone.
This is incredibly important for Latinos, who are also overrepresented in the small business workforce. One in three Latinos (36.2 percent) is employed in a small business. And nine out of ten have fewer than 50 employees who now stand to gain access to affordable coverage—some now and some in the future.
Now, it’s clear—the Affordable Care Act looks out for the little guy. Even mom and pop shops have a fair shot at accessing affordable health insurance.
Issues: Health Care, Health Care Reform, Health Care Disparities, Health Care Stories
Geography:California, Far West, Midwest, Northeast, Southeast, Texas