Tax credits in the health care reform law designed to offsethealth insurance premium costs mean that small businesses will beone of the first groups to benefit from the legislation, accordingto anewreport from the Commonwealth Fund.

There are other provisions in the legislation that will helpsmall businesses reduce the estimated 18 percent differentialbetween the cost of health insurance for small and large companies,the report said.
These include establishment of state-based insurance exchanges thatpromise to lower administrative costs and pool risk more broadly,and creation of new market rules and an essential benefit standardto protect small firms and their workers, according to thereport.

The Commonwealth Fund report projects that up to 16.6 millionworkers are in firms that would be eligible for the tax credit,starting this year through 2013.

And, over the next 10 years, small businesses and organizationscould receive an estimated $40 billion in federal support throughthe premium credit program.

The report notes that small businesses have “historicallystruggled” to find adequate health insurance coverage. On average,the report said, small firms pay up to 18 percent more in premiumsthan large firms do for the same health insurance policy. In theseplans, a higher share of the premiums is used for administration,marketing, insurance broker commissions, underwriting and otheroverhead costs of the insurance carrier.

Additional savings will be realized by 2020 through provisionsthat reduce insurers' administrative spending and increasecompetition among insurers participating in insurance exchanges,the report said.