Urban/RWJF-The Effects of Health Reform on Small Businesses and Their Workers

The Urban Institute report, sponsored by the Robert Wood Johnson Foundation, combines the results of several Urban Institute studies that address the likely effects of the Patient Protection and Affordable Care Act (ACA) on small employers. The authors also give estimates of the impact of the ACA on employer costs, offers and coverage from the Urban Institute’s Health Insurance Policy Simulation Model (HIPSM). According to the authors, historically it has been more difficult for small employers to offer their employees affordable health care coverage. Small business face high premiums due to high administrative costs and limited ability to spread risk. As a result, small firms have lower offer rates than large firms, their employees are more likely to be uninsured and small firms are at a disadvantage in competing with larger firms for employees. The ACA has the opportunity to mitigate these issues by:

• Creating health insurance exhcanges
• Implementing insurance market reforms
• Offering small business tax credits
• Expanding coverage options outside of of ESI (Medicaid expansion, reformed individual health care market, and premium subsidies for low-income individuals)

Read the entire report here.