What does healthcare reform mean for business?

Obama's Healthcare Reform Bill

A 219-212 Senate vote was enough to clear President Barack Obama's healthcare reform bill that looked so unlikely to make it through the House just a few months ago.

For the America consumer the passing signals a sea of change in the way they receive and manage healthcare and insurance. The effect of some of these changes will be felt within a few months, but the reform's biggest impacts will not be felt for a number of years and some of the benefits for consumers aren't even assured of passage through the Senate as final rules are still subject to changed.

But what do the changes mean for American businesses who's processes of purchasing and providing health insurance for themselves and their employees are also changed, possibly forever?

"SHOP Exchanges"

Among the changes is the requirement for states to set up Small Business Health Options Programs (or "SHOP Exchanges") no later than 2014 in order to help trim small business (firms with no more than 100 staff) insurance costs.

Until then, businesses with 10 or fewer full-time-equivalent employees earning less than $25,000 a year on average will be eligible for a tax credit of 35 percent of health insurance costs.

One of the major changes to the ways things are done is that insurers will no longer be able to set rates or exclude coverage based on pre-existing conditions and instead can only alter premiums based on geographic location, age, and tobacco use. Again though, this will not apply before 2014. Unlike the ban on lifetime limits on coverage, and on "rescission" (canceling policies already issued) except in cases of fraud, which comes into effect immediately.

Another big change, as reported by CNN, is that by 2014 businesses with more than 50 employees will be required to either offer healthcare coverage or pay a penalty of $750 a year per full-time worker. The coverage offered will also have to meet minimum benefits - covering both a specific set of services and 60 percent of employee health costs overall - or else employers will face additional penalties.

Upsides for businesses

There are upsides for businesses, the insurance business in particular, of course. Although insurers face tighter regulation, there will be potentially millions of new customers as the final bill does not create what was initially proposed - a government-run scheme that would compete with private insurers.

The primary aim for the bill is obviously for all Americans to receive a better level of healthcare and if this is achieved then one tends to think that this will mean less sick days, less people of work and therefore greater productivity.

Hospitals and drug companies will also benefit from more people being able to pay for their hospital treatment, visits to the doctors and prescription drugs.

Concerns that reform will drive up costs and increase the budget deficit are understandable (some estimates put the price at $940 billion over ten years), but the benefits for employees are clear. It remains to be seen whether forthcoming government legislation will be enough to aid the country's businesses through the changes.

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Daniel Jones

Daniel is a Politics and Philosophy graduate from Cardiff University where he also worked as a section editor on the award winning student newspaper. After university he joined an IT support company where he was a B2B online writer. He loves anything to do with sport and joined GDS in July 2009.

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