SACRAMENTO — California’s small businesses next year will have a range of competitively priced options offered by a new state government health insurance exchange.
The agency, Covered California, unveiled its portfolio of policy options for smaller businesses Thursday. They include both health maintenance organizations and preferred provider networks and will be available in all parts of the state as of Jan. 1.
Rates in most of the state’s populous counties are expected to be significantly below premiums now charged by insurers for similar plans. Average premiums for a 40-year-old employee are slated to fall 17% in southern Los Angeles County and 13% in the northern part. Rates for younger and older workers are expected to drop proportionally, Covered California said.
An important element of President Obama’s Affordable Care Act, these small-business exchange policies will take effect Jan. 1. Insurance companies will continue to offer small-business policies apart from the exchange.
Giving small-business owners new options to help their employees is crucial in California, healthcare advocates argue. According to the California Healthcare Foundation, the state has more than 7 million people under the age of 65 who don’t have health insurance. Statewide, 25% of workers are not insured. That rises to 40% at companies with fewer than 10 people.
“This adds competition to the marketplace,” said Scott Hauge, a San Francisco insurance broker and president of Small Business California, which advocates for half a million employers around the state. “The exchange clearly will be a major competitor.”
Businesses with fewer than 50 employees can take advantage of the buying power of the exchange’s new Small Business Health Options Program. However, they are not required to do so under the federal Patient Protection and Affordable Care Act.
Small businesses with fewer than 25 full-time workers that purchase the state-backed coverage could further lower their costs by qualifying for a federal tax credit of as much as 50% of total employer-paid premiums.
Individuals not covered by employer or government programs will be subject to financial penalties if they don’t get insurance.
Participating insurance companies include Blue Shield of California, Chinese Community Health Plan, Health Net, Kaiser Permanente, Sharp Health Plan and Western Health Advantage. Each provider will offer four tiers of benefits dubbed Platinum for the most comprehensive, followed by Gold, Silver and Bronze.
Employers will pick the level of coverage they want. Employees would still be free to choose among all the locally available products within that category, even if they are from different insurance companies. Prices and benefits can vary from insurer to insurer, even if they are in the same category.
Not participating in the small-business exchange is Anthem Blue Cross, the largest for-profit health insurer in the state.
California has aggressively prepared to put into place Obama’s signature Affordable Care Act — informally known as Obamacare — since he signed it into law in 2010. Earlier this year, the administration of Gov. Jerry Brown made public its programs for covering individuals.
The latest offering should be a boost for small businesses because it will put them “on par with larger employers in terms of benefits,” said Peter V. Lee, executive director of Covered California.
“Employer-sponsored health coverage,” he said, “has historically played an important role in insuring Californians. Our launch of a full-choice, small-group market is a testament to the state’s commitment to build on the critical role of employer-based coverage.”
Although Covered California gives small employers a range of options to attract and keep employees, it might not be the best deal for all companies, especially those that operate on slim profit margins, said John Arensmeyer, founder and chief executive of Small Business Majority, a national lobbying group based in San Francisco Bay Area.
“They may sit down and do calculations and there may be situations where it’s better for the employees to go to the individual exchange and get subsidies,” Arensmeyer said. But, what’s important, he stressed, is that either way the workers will have health insurance that they couldn’t previously get.