The U.S. Department of Health and Human Services (HHS) proposed a framework today to assist states in building Affordable Insurance Exchanges that will give small businesses the ability to purchase affordable private health insurance and to have the same insurance choices as members of Congress. So far, small business organizations have given the new rules mixed reviews.
"Exchanges offer Americans competition, choice, and clout," said HHS Secretary Kathleen Sebelius. "Insurance companies will compete for business on a transparent, level playing field, driving down costs; and exchanges will give individuals and small businesses the same purchasing power as big businesses and a choice of plans to fit their needs."
The new rules offer states guidance and options on how to structure their exchanges.
The Small Business Majority, an advocacy group, hailed the proposed rules.
"The most important component of health care reform for small businesses is the creation of state health insurance exchanges," said Terry Gardiner, the organization's vice president of policy and strategy. "They will lower the high cost of insurance premiums and reduce the administrative costs that are so often the driving force behind skyrocketing rates for small group plans,” Gardiner said. “Setting up exchanges that work effectively for small businesses and consumers is not simple, but it’s critical it’s done right. The exchange rules issued by HHS today provide strong guidance to states on how to setup an exchange that will work effectively."
The response from the Small Business & Entrepreneurship Council (SBE Council), another small business advocacy group, was more critical of the rules. Karen Kerrigan, the SBE Council's president and CEO, said the framework's conditions — even with the provision of "flexibility" — point to costs and complexities that could make the exchanges expensive to operate.
Moreover, the dire fiscal condition of many states may cause some of them to decide to go with the federal-partner option in running their exchanges. Rather than imposing a framework which may end up increasing costs for health care consumers, Kerrigan said, it makes more sense to have a national, competitive marketplace for health coverage, or allow the exchanges to develop organically.
"Over the last several years, there has been legislation introduced in the Congress that would enable a national marketplace for health coverage while still offering protection for consumers," Kerrigan said. "In order for small business owners to have the greatest amount of choice in the system and at the best price, they should be allowed to shop on a nationwide basis for a plan that best fits their employees' needs. That means no one-size-fits-all mandates from the federal government, which only limit choices and drive costs higher."
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