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Small Businesses May Find Insurance Relief In Exchanges

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Walk down the carpeted hallways of Westwind Media in Burbank, Calif., and it's common to hear the odd explosion, the hum of traffic or a burst of gunfire.

It's here in these edit bays that small feature films and episodic television dramas like the ABC hits Grey's Anatomy, Scandal and CBS's Person of Interest get primped and polished for prime time viewing.

But while about 45 employees work here to make Hollywood magic happen, general manager Sunder Ramani is focused on the less exotic work of paying the bills and figuring out how to provide health insurance to about 15 workers who don't have union-provided health coverage.

"Up until about two years ago, we had probably the Cadillac of plans for our employees," he says. "We picked up 100 percent of that plan, which was, I think, a huge tool in our arsenal in terms of getting good people to come work for us."

Double-digit premium increases in recent years have forced Ramani to downgrade his employee coverage, which his insurance broker has warned may soon soar another 25 to 35 percent above last year's increase.

"Which is a significant hit," Ramani says, "but they can't tell me enough yet until we get closer to that time. So I'm here in a limbo world trying to decide what it is I'm going to do."

One new option he'll soon have is to buy insurance through Covered California's SHOP exchange. SHOP stands for for Small Business Health Options Program. It's California's version of a small-business insurance program that is part of the federal Affordable Care Act. The state has 500,000 small businesses.

All states are offering similar small-business exchanges. These are marketplaces for employers with 50 or fewer full time workers, and are designed to offer more affordable insurance to mom-and-pop businesses that have long paid more than large companies for the same level of coverage.

"Small businesses are horribly disadvantaged in terms of being able to purchase insurance," says Peter Harbage, president of the Sacramento-based health policy firm Harbage Consulting. "If they're even able to purchase it, they have to pay more and they get less."

Harbage says that not only will SHOP plans offer competitive prices, they will also offer tax benefits that for some smaller companies might cut premium prices in half.

But John Kabateck is not so optimistic. He is California executive director for the National Federation of Independent Business, and represents more than 22,000 small businesses in California.

"There are a lot of uncertainties as it relates to the law," he says. "We are hopeful that they will find affordable coverage within the exchange. We are hopeful they will have the ability to pick and choose in the marketplace."

Business owners will need to closely inspect the policies offered, Kabateck says, as some participating insurance companies have announced they're keeping premiums lower by offering a smaller network of doctors and hospitals. And that means fewer choices for employees.

And whether or not a small business opts to provide workers health coverage, there's really no way for them to avoid the extra time and cost it will take to navigate the new law's reporting requirements. And that's a concern shared by Westwind's Sunder Ramani.

"Small business doesn't have scale," Ramani says. "We don't have a legal department. We don't have an HR department We navigate through mountains of regulations, not just about health care but about everything we do here. We're just getting bombarded on all levels."

For now, Ramani says he'll sit tight and watch before deciding whether the SHOP marketplace will provide him a better way to buy affordable, quality health insurance for his employees.

Under the Affordable Care Act, small businesses are not required to provide insurance to their workers. Only those with more than 50 employees must do so, beginning in 2015.

This story is part of a collaboration with NPR, KPCC, and Kaiser Health News.

Copyright 2013 Southern California Public Radio. To see more, visit http://www.kpcc.org/.

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