Presentation by Terry Gardiner Small Business Majority National Academy for State Health Policy

1. Exchanges – Attracting Small Businesses Presentation by Terry Gardiner Small Business Majority National Academy for State Health Policy February 16, 2011

2. About Small Business Majority • Public policy advocacy organization – founded and run by small business owners • National – based in Bay Area – with offices in Sacramento, Washington, DC and New York • Research and advocacy on issues of top importance to small businesses (<100 employees) and the self-employed • Very focused on healthcare over the past 3 years – top issue in all of our research

3. SBM Exchange Model Bill • Built on foundation of NAIC Model Bill • We conducted focus groups, listening tours and webinars to get small business owner feedback about exchanges • We are active participants with other business and policy groups working on exchange designs • Policy choices and additions based on our research that serve small businesses

4. SBM Model Bill: Lessons Learned We studied and interviewed representatives from exchanges to understand the successes, failures and lessons learned

5. Effective Outreach & Education • Only half of employers belong to a business group • Trusted Advisors – their brokers, accountants, peers • Communication – business press, business groups, trade groups • Navigators need to be trusted messengers

6. Employer Health Coverage Choices • Purchase health coverage through the exchange • Purchase health coverage in the outside market • Maintain a “grandfathered” health plan • Do not offer health coverage Will the exchange offer “value” – lower price; better coverage; better services?

7. Trust, Value and Choice • An independent exchange will create the greatest trust and support • “Active purchaser” model can provide value for employers and employees • “Employee choice” model is needed to differentiate from outside market and drive consumer choice and value

8. Meeting the Needs of Employers • 5.9 million employers with fewer than 100 employees employ 43 M nationally • 80% (4.8 M) have fewer than 10 employees • 54% (2.6 M) of employers with fewer than 10 employees do not offer health coverage • Most small businesses are very small and lack sophisticated HR departments • Average employer in Connecticut exchange has 8 employees

9. Single Point of Entry for Employers • All necessary information for employer and employees to make decisions on coverage • One application • One premium payment & detailed accounting • One source for enrollment changes

10. Full Array of Services • Qualification and calculation of the small business tax credit; state programs • Coverage of out-of-state employees • Coordinating coverage of Medicare-eligible employees • Provides additional “HR” services such as Cobra administration, Section 125 service, HSA/FSA/HRA

11. Brokers Working for Exchanges not Against • Recognize different role of brokers for individual and small group markets • Brokers will have ongoing role with small business selling other products • Initial launch and reception has proven critical for both employers and brokers • Balancing broker compensation and services with competitive cost to employers will be challenging • Successful models train and support brokers on ongoing basis

12. Other Measures to Attract Business • Defined contribution option – NY, Utah & Montana • Contributions by multiple employers for part-time workers – Utah • “Free choice” voucher • Support of larger businesses

13. Small Business Resources Frequently asked questions: http://smallbusinessmajority.org/hc-reform-faq Small business healthcare reform summary: http://smallbusinessmajority.org/_docs/resources/SBM_whats_in_it_for_small_biz.pdf For more information: Terry Gardiner National Policy Director Email: tgardiner@smallbusinessmajority.org