The Urban Institute

1. The Urban Institute Small Business and Health Insurance in the District of Columbia Washington Area Policy Forum August 9th, 2006 The Urban Institute 2100 M Street NW Washington, DC 20037

2. Small Business and Health Insurance Response to Survey Cynthia Brock-Smith Vice President for Government Relations DC Chamber of Commerce August 9, 2006 Urban Institute Washington Area Policy Forum

3. Challenges Faced by Businesses • Small businesses struggling to provide affordable coverage for their employees • Workers with insurance are struggling to keep their coverage • Affordability is number one issue for most businesses • Reasons firms do not offer coverage • 74% cannot afford to offer; 54% insurance cost unpredictable • Reasons people are uninsured are diverse, so there is no single solution

4. Employers Concern • Employers share concern about covering the uninsured • Employers want to provide affordable coverage to employees • Rising cost of health care coverage is a growing concern • Employers seek cost sharing – employee responsibility

5. Small Firms in DC • Majority of small firms in DC are professional services, financial services, nonprofits, religious organizations • Majority offer health insurance • More likely to pay all of the premiums because of the economic benefits

6. Businesses benefit economically • Helps employers recruit high quality workers • Reduces absenteeism and staff turnover • Limits workman’s comp claims • Premiums are tax deductible to business • Payments excluded from base payroll when calculating an employers Medicare and social security payments Employees consider insurance most important fringe benefit – Affordability not access is issue

7. Small Businesses Seek Affordable Solution • DC Chamber Experience • Small Business Groups Differ on wisdom of Association Health Plans • Allows small business to ban together to negotiate lower health premiums from insurers; exempt from state regulations • States attempted to improve access and quality • Some consider mandates and subsidies

8. Study says Premium Subsidy would be helpful • Study shows that as premiums increase, more firms likely to offer coverage • Majority of people who work in DC are not DC residents • Mandates and subsidies difficult to administer and very costly to City • Establish a collection of plans and implement policy to stabilize premiums

9. DC compared to MD/VA • Data from 2004 Interim Report • Data comparing DC to neighboring states in 2000 show DC businesses offer insurance more often (74.2% compared to 62.0% in Maryland and 62.3 % in VA) • Almost 95% of private sector employees in DC work for an establishment that offers insurance (Lillie-Blanton 2004) • In 2000 Census, 71.6% of DC jobs held by residents from the suburbs

10. DC Addresses Uninsured • 74,000 uninsured in DC • 50,000 earn below 200% FPL which qualifies them for Alliance or Medicaid • 15,000 between 200-400% of FPL • Healthy DC will expand coverage up to 300% of federal poverty level • DC should focus on enrolling eligible uninsured in Healthy DC and other govt programs

11. DC small businesses are doing a better job than counterparts in suburbs in offering insurance • DC Firms have more part time and low wage earners - Healthy DC, Medicaid and Alliance are helping close the gap. • Less than 30% of the people who work here are DC residents • Employer sponsored insurance is the main source of insurance in the District (UI)