Helping small businesses help their employees: A Maryland bill aims to subsidize health insurance costs; will it survive?

A problem with having a big influx of funds, in this case hundreds of millions of dollars from the American Rescue Plan Act, is that it’s often accompanied by a long line of organizations with their hands out, advocating for one worthy cause after the other. The needs are almost always greater than the windfall, no matter how large, and many will leave empty-handed, despite the meaningful benefit their projects could offer individuals.

One such worthwhile proposal that’s in jeopardy before the General Assembly would provide subsidies to certain small businesses and nonprofits to help them and their employees better afford health insurance plans on the Maryland Health Connection, the state’s health insurance marketplace.

The legislation, House Bill 709 and Senate Bill 632, calls for up to $45 million in subsidies annually for calendar years 2024 through 2029 for businesses and nonprofits with 25 or fewer full-time-equivalent employees, and an additional $3 million in outreach. Unfortunately for the bill, it was to be “subject to the availability and receipt of federal funds,” which is never a guarantee, and Maryland’s pile of money is already largely claimed.

There’s a movement underway to salvage a sliver of the proposal, and we heartily hope lawmakers see the merits. While it would likely only affect a few thousand people, rather than tens of thousands as in the original bill, every little bit counts.

Just 37% of small businesses in the state provide health coverage to their employees, compared with 95% of large employers. That means workers either pay full freight themselves or go without. Helping small businesses cover some of the cost would also help them attract workers. And it would help workers get on the health insurance rolls, offering them protection from the often bankrupting price of unexpected medical care.

There’s also an equity factor to be considered. As of last year, nearly 40% of Maryland’s small businesses were owned by people of color, according to the U.S. Small Business Administration. And nearly 43% of small business employees are non-white. These groups are also the least likely to have health coverage. While the implementation of the federal Affordable Care Act in 2010 helped close the gap, some gains were lost during the Donald Trump administration, and disparities persist today.

The last ditch effort to push the bill forward comes at a steep price, however; so steep, you can’t even call it a compromise. The details are still being worked out, but for now, advocates are recommending a two-year pilot program of $3 million in subsidies each year, paid for from the state budget. Eligible employers would now include those with 1 to 10 employees, not up to 25, and they would be required to have not offered group health insurance to their workers for the prior 12 months.

The basic criteria of the reworked proposal are modeled after a 2007 state law, known as the Working Families and Small Business Health Coverage Act. It offered a health insurance tax credit that left only 35% to 50% of the insurance premium on an employer’s tab — a significant discount. Under that program, health insurance was extended to more than 100,000 uninsured Marylanders from July 2008 to May 2015, when it was shut down on speculation that small business tax credits from the Affordable Care Act would make the state program unnecessary.

It didn’t work out that way, however. There wasn’t enough money, and few took advantage of it because of a cumbersome structure, leading the state to once again look for ways to boost health insurance coverage on its own. The size of the subsidy in today’s proposal would be determined by the Maryland Health Benefit Exchange, which oversees the Maryland Health Connection. It’s expected to help at least 2,000 people get coverage.

At a cost of $6 million, it’s a bargain.

The original bills introduced in the legislature this year had bipartisan support, if not financial backing, and we’d hope to see the same for the scaled down pilot. If it proves worthy after two years, we’d also expect it to grow in the future — but with dedicated funding.

Baltimore Sun editorial writers offer opinions and analysis on news and issues relevant to readers. They operate separately from the newsroom.

https://www.baltimoresun.com/opinion/editorial/bs-ed-0317-health-insurance-small-business-20220316-omdmxwv6srax7baxl3ojce6qie-story.html

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